Bangladesh has undergone rapid socioeconomic progress in recent decades, attaining lower middle-income status in 2015.  Between 2001 and 2019, poverty declined from 48.9% to 20.5%, and extreme poverty from 34.3% to 10.5%.  However, the country has faced several challenges in its continuing climb to upper middle-income status.  These challenges include (i) boosting investment to accelerate economic transformation through diversification, (ii) identifying new sources of growth and making growth more inclusive, (iii) addressing inequality and further reducing poverty by creating jobs, and (iv) improving transparency and accountability in public service delivery. 

Considerable investment is needed for faster economic growth and poverty reduction, and this would require significantly boosting government resources by, among other things, expanding the revenue base, improving tax collection that is one of the lowest globally, and improving land administration and management system. The country also needs to improve the allocative efficiency of its limited resources through good governance, for which changes in the service delivery mechanism, supported by state-of-the-art information and communications technology (ICT), are urgently needed.

The Strengthening Governance Management Project was undertaken in light of government policy prioritizing (i) the modernization of the tax system to improve tax collection and enhance transparency and accountability in dealing with the taxpayers, and (ii) the introduction of a modernized and efficient land administration system through digitized land records to provide better land-related public services.  It was approved by the Asian Development Bank (ADB) for a loan of $25 million in September 2010.

The project’s envisaged impact is enhanced public trust in the central government for service delivery, and its expected outcome is improved transparency and accountability of public service delivery in tax and land record administration in Bangladesh with the help of ICT. The project outputs include (i) online filing of tax returns, (ii) a digitized land records management system in select districts, and (iii) improved access to tax and land information in specialized information and service centers. A pilot approach was adopted for land management because digitizing land records is administratively complex and politically challenging.

At completion, the project achieved all its output targets. An online income tax return filing system was introduced, using an integrated software application.   Related backbone servers and other hardware, and networking to develop a platform for real-time, countrywide, online connectivity were installed.  An integrated tax and revenue management system, the Bangladesh Integrated Tax Administration System (BITAX), was developed especially for income taxes.  A digital land record system improved the security of land titles in selected upazilas (sub-districts), helped protect and efficiently manage government interest in land and reduce land-related court cases, and lessened the time to complete a land mutation, among others.

All tax offices were developed into tax service centers, fully equipped with ICT equipment and relevant software.  A digital land management system (DLMS), which improved access to land information through a digital archive of all existing records of rights (RORs) and khatians (individual land titles) and mouza (district) maps was launched in 20 land information service centers.  Trainings undertaken on the use of the DLMS helped make the system immediately operational down to the upazila level.

Successful completion of all intended outputs enabled the project to achieve its expected outcome.  A risk-based audit system for income tax has been installed, and between 2008 and 2020, the country’s tax revenue grew to $8.6 billion from $1.75 billion.  The number of income taxpayers also increased by over 3 times, reflecting growing effectiveness of the tax collection authority.

As of June 2020, over 5.3 million potential taxpayers had registered in the BITAX system and over 2.7 million manually submitted tax returns had been digitized and uploaded to the system. Gender-disaggregated land ownership data has been available on request. However, only 7,209 of the country’s 2.2 million taxpayers had submitted their tax returns online. It is expected that the use of the system will gain traction with the government’s continuing enhancements and policy measures. As of project completion review,  the government was also strengthening taxpayer education, awareness, and monitoring to make online filing more user-friendly and acceptable to taxpayers.

With the DLMS, the time it takes to verify RORs and issue mutations has declined from about 45 days to 7 days. From June 2017 to February 2019, 71,297 out of 82,022 requests for RORs, mouza maps, and mutation, have been approved by the land offices piloting the DLMS. Gender-disaggregated land ownership data has also been available on request. Lessons from the pilot experience have informed government’s planned countrywide program to digitalize land records and its ongoing work on a large ICT project to improve land management.

The National Board of Revenue under the Ministry of Finance was the executing agency for the online tax return filing and the tax service centers; while the Department of Land Records and Survey under the Ministry of Land executed the DLMS and land information service center components.