VAT makes up 38% of Bangladesh’s total tax revenue: Finance minister

Value-added tax (VAT) accounts for 38 percent of Bangladesh’s total tax revenue, Finance Minister Amir Khosru Mahmud Chowdhury said this afternoon.

He said the government had taken various measures to prevent VAT and tax evasion.

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The minister made the remarks in response to queries from two MPs during the question-and-answer session in the parliament.

Responding to Selina Sultana, Amir Khosru said VAT is a modern system of indirect taxation that is used in 175 countries. Bangladesh introduced the system in 1991 during the tenure of Begum Khaleda Zia.

VAT is the largest source of government revenue, he said.

At the retail level, VAT paid by consumers on general goods and services is generally collected by sellers, who then deposit it with the government by submitting VAT returns within the prescribed period.

A full audit of an institution is the primary means of verifying whether the system is being implemented properly, the minister said. Such audits determine whether a seller has evaded taxes.

The government has also taken initiatives to collect sales information in real time using various technologies, he said.

Responding to a query from Nilofar Chowdhury Moni, the finance minister outlined several measures taken to curb VAT and tax evasion.

The government is bringing unregistered organisations under the VAT registration system to ensure proper tax collection. Between February and July 2026, a total of 27,401 new organisations were registered for VAT.

The government has also placed special emphasis on the deduction and deposit of VAT at source. Measures have been taken to ensure that VAT collected by entities responsible for deduction at source is properly deposited in the government treasury, including ensuring the submission of VAT returns and maintaining special surveillance.

As a result, VAT collection at source increased by Tk 6,286.43 crore in fiscal year 2025-26 compared with fiscal year 2024-25, the minister said.