Bangladesh lost $692 million in tax revenue from 2016 to 2021 due to profit shifting by multinational companies, according to a new report by the Tax Justice Network (TJN) released yesterday.
The report, The State of Tax Justice 2025, says global firms moved $2.45 billion in profits out of Bangladesh to avoid paying local taxes.
Profit shifting is a common tax avoidance tactic where companies transfer earnings from countries with higher taxes to low- or no-tax jurisdictions. They do this through intra-group transactions, such as charging fees between subsidiaries, reducing taxable income in Bangladesh while booking profits elsewhere.
Bangladesh is the fourth-largest country in South Asia—after India, Sri Lanka, and Pakistan—in terms of profit shifting and tax losses.
On average, the South Asian country loses about $397 million each year to global tax abuse, roughly 1.6 percent of total tax revenue, or $2 per person. Of this, $371 million comes specifically from multinational corporations. The report adds that the lost revenue equals nearly a third of Bangladesh's health budget and over 6 percent of its education spending.
The TJN report also states that United States-headquartered multinationals are responsible for revenue losses around the world of $495 billion—about 29 percent of the global total of $1.7 trillion. The US itself has suffered $574 billion of the global total, of which its own multinationals were responsible for $271 billion.
The report, however, points out that US-based multinationals did not shift profits from Bangladesh between 2016 and 2021.
Towfiqul Islam Khan, additional director at the Centre for Policy Dialogue (CPD), said Bangladesh has made strides in various areas of development, but tax justice remains a significant challenge.
He outlined three priorities for Bangladesh to achieve tax justice, the first of which is improving direct tax collection so wealthier individuals pay their fair share. "This requires a substantial improvement in direct tax collection, particularly through effective measures to curb tax evasion."
Second, ensuring tax policies are progressive and not misused. "While it's essential to offer concessional tax policies to support entrepreneurs, it's equally important to ensure that these benefits are not misused."
Lastly, there must be a commitment to delivering value for public money. "If the government fails to ensure that tax revenues are spent wisely, then true tax justice cannot be realised. Thus, it is vital to tackle corruption effectively, both during the tax collection process and in public expenditure," he said.
"Tax justice is closely tied to the prevention of ill-gotten wealth. Therefore, progress in combating money laundering is crucial for establishing a fair tax system in Bangladesh," Khan also noted.
The Daily Star, earlier this month, reported that multinational companies in Bangladesh are seeing rising sales as consumer demand recovers, but their profits remain weak.
According to financial reports by 12 multinational companies, their combined sales grew by 8 percent in the July–September period of this year. By comparison, their sales increased by 1 percent in 2024 and 3 percent in 2023. However, their combined profitability fell from 9.28 percent in the first quarter of 2024 to 8.61 percent in Q1 of FY26.
