Businesses fear widespread harassment, corruption after NBR announces major tax inspection drive

Business leaders have expressed concern after the National Board of Revenue (NBR) announced it would conduct on-site inspections of business premises and seize documents and electronic records to detect tax evasion, warning the move could increase harassment and corruption instead of boosting revenue.

They urged the government to fully automate the tax system, arguing that digitalisation would reduce both tax evasion and opportunities for bribery by tax officials.

In a statement issued after the NBR's announcement, the Dhaka Chamber of Commerce and Industry (DCCI) called for ensuring that compliant businesses are not subjected to unnecessary harassment.

In a notice issued on 19 July, the NBR said its officials would be authorised to enter any commercial or economic establishment without obstruction to verify whether withholding tax had been properly collected.

Officials will be able to examine and requisition account books, vouchers, bank statements, receipts and other financial records. They may also inspect data stored in computer systems, cloud servers and electronic devices and, if necessary, access password-protected or encrypted information.

To verify withholding tax compliance, officials may temporarily seize account books, documents, electronic records or devices, or collect copies of documents, images and accounts. Anyone obstructing such operations may face penalties under Section 147(2) of the Income Tax Act, including fines of up to Tk50 lakh.

Although the powers already exist under the law, business leaders noted that such drives had previously been conducted discreetly against suspected entities rather than announced publicly, creating widespread concern among businesses.

Abdul Wahed, president of the Chapai Nawabganj Chamber of Commerce and Industry, told The Business Standard the move could backfire.
"Rather than increasing revenue, it may disrupt business and create more opportunities for bribery and corruption," he said, adding that the government should prioritise digitalising the tax system and strengthening the NBR's institutional capacity.

A leading garment exporter in Chattogram, speaking on condition of anonymity, said even compliant businesses could face increased harassment and demands for bribes.
The DCCI also urged the NBR to allow businesses that have not yet achieved full compliance sufficient time and opportunity to do so.

Repeated attempts to contact NBR Chairman Ahsan Habib for comment were unsuccessful. However, an NBR senior official, speaking on condition of anonymity, told The Business Standard that the powers outlined in the notice were already provided under existing law and that the circular merely served as a reminder.

"In the past, officials faced non-cooperation during inspections at some establishments," he said. "This year we have a much higher revenue target, and tax deducted at source (TDS) accounts for the largest share of income tax collection. The measure is intended to prevent evasion in this area, not to harass businesses."

The NBR has been tasked with collecting Tk6.04 lakh crore in revenue in FY27, about 45% higher than last year's collection. Large-scale enforcement drives have been limited since the fall of the Awami League government in August 2024, but the new NBR chairman appears to be reviving the initiative.