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Regrettably, revenue-GDP ratio in Bangladesh is one of the lowest amongst peer countries (10.2 per cent in FY2017). The tax-GDP ratio in Bangladesh was 9.0 per cent in FY2017 (MoF 2018), which is significantly lower than the average 15 per cent mark for its developing counterparts. A low compliance rate can be observed as merely 27.3 per cent of all potential income taxpayers declared income tax in 2010. Existing legal, regulatory and institutional mechanisms do not allow full realisation of the personal income tax potential.

The primary objective of this study is to review the current revenue mobilisation system of Bangladesh and critically estimate the size of potential personal income tax of Bangladesh economy using most recent data from the HIES. Furthermore, this study attempted to find out the key determinants of public compliance regarding tax submission. To this end, a perception survey, covering 21 districts, was conducted.

The selected sample was nationally representative and consisted of individuals who are either currently paying or eligible for paying income tax. This implies that, individuals, whose gross annual income exceeds the current tax-exempt threshold, was selected for sampling.

Theme: Governance and Legal Issues

Research Method: Quantitative

Project Status: Accomplished

Starting Year: 2018

Donor: CPD, Embassy of Denmark

Study Area: Barisal, Chittagong, Chuadanga, Comilla, Dhaka, Dinajpur, Gaibandha, Gazipur, Joypurhat, Jessore, Khagrachhari, Khulna, Madaripur, Magura, Narail, Narayanganj, Natore, Noakhali, Rajshahi, Rangpur, Sylhet