Bangladesh loses $355 million every year due to corporate tax abuse by multinational companies and illicit wealth transfers by the wealthy, according to a report by the UK-based Tax Justice Network (TJN).
The report highlights how multinational corporations operating in Bangladesh shift profits abroad, depriving the country of significant tax revenue.
In 2023, these companies transferred $1.03 billion in profits overseas, resulting in an annual tax loss of $335 million.
Additionally, affluent individuals building wealth abroad contribute to a $19 million annual shortfall in tax revenue.
This loss is equivalent to 21.4% of Bangladesh's annual health sector expenditure, underscoring the critical impact on essential public services.
TJN’s findings show that corporate tax abuse and illicit financial flows are not unique to Bangladesh. Globally, countries lose $492 billion annually to profit shifting by corporations and tax evasion by wealthy individuals.
However, for an economy of nearly $460 billion like Bangladesh's, the impact of such losses is particularly stark.
Despite recent reductions in corporate tax rates and the introduction of tax holidays to attract investment, multinational corporations continue to exploit loopholes, moving profits to jurisdictions with lower taxes.
This undermines Bangladesh’s efforts to strengthen its tax base and fund vital development initiatives.