VAT accounts for 38% of Bangladesh’s total tax revenue, finance minister says

Value-added tax accounts for 38 percent of Bangladesh’s total tax revenue, Finance Minister Amir Khosru Mahmud Chowdhury told parliament, describing VAT as the government’s largest source of revenue.

He said the government had introduced measures to prevent VAT and tax evasion during a question-and-answer session with lawmakers. VAT, which Bangladesh introduced in 1991, operates as an indirect tax collected from consumers through sellers, who deposit the money with the government by filing returns within the required period.

The minister said full audits of institutions remain the main way to verify whether the system is being properly implemented and to identify evasion. The government is also using technology to collect sales information in real time.

Between February and July 2026, authorities registered 27,401 new organizations for VAT. The government has also focused on the deduction and deposit of VAT at source, including monitoring whether responsible entities submit returns and transfer the money to the treasury.

Those measures helped increase VAT collected at source by Tk 6,286.43 crore in fiscal year 2025-26 compared with 2024-25, the minister said. He added that VAT is a modern form of indirect taxation used in 175 countries.