Improving personal income tax compliance in Bangladesh

Abstract

This paper aims to examine the current scenario of personal income tax in Bangladesh and ways to improve the compliance behavior of the potential and eligible taxpayers of the country. In order to conduct the survey, a set of questions were made based on the variables of BISEP Model. The survey was conducted on the individual taxpayers i.e. the government service holder, private service holders and business professionals; tax practitioners and tax officials/staffs. The Importance of personal income taxes is not only in their financial contribution to the public budgets but also in their impact on other government policies and goals. Though Bangladesh is having huge potential in improving the revenue from the personal income taxes, the non-compliance behavior of the taxpayers is limiting the prospect. Also, widespread exemptions, narrow tax base, tax holiday, corruption, system loss is interrupting the whole tax structure. Finally, the paper concludes with the related stakeholder analysis and policy recommendation considering the empirical study.