Demand for tax relief, finance minister cites constraints

Business leaders from various sectors have put forward a range of demands for the upcoming national budget, including reductions in corporate tax, turnover tax, and withholding tax, as well as exemptions from value-added tax (VAT) at the production stage for certain goods and a decrease in flat registration fees.

They state that the country’s industrial sector is facing multiple challenges, including an energy crisis linked to the Iran war, high inflation and elevated interest rates.

In such circumstances, they argue that policy support is essential to restore confidence in trade and commerce.

Responding to these demands, Finance Minister Amir Khasru Mahmud Chowdhury stated, “It may sound disappointing, but even if we wish, we may not be able to provide such benefits in the upcoming budget. However, we will remove the existing obstacles to doing business. The growth of the private sector will drive the country’s economy forward.”

Business representatives presented these demands during the 46th meeting of the National Board of Revenue (NBR) Advisory Committee, jointly organised by the NBR and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), ahead of the national budget for the 2026–27 fiscal year.

At the same meeting, the Finance Minister outlined the government’s position in response to these proposals.

The meeting took place on Wednesday morning at Sonargaon Hotel in the capital. Finance Minister Amir Khasru Mahmud Chowdhury attended as the chief guest.

Commerce Minister Khandaker Abdul Muktaadir, President of the International Chamber of Commerce (ICC) Bangladesh Mahbubur Rahman, and former FBCCI President Mir Nasir Hossain were also present.

NBR Chairman Md Abdur Rahman Khan chaired the session. At the outset, FBCCI Administrator Md Abdur Rahim Khan presented the proposed budget recommendations for the upcoming fiscal year.

FBCCI has proposed increasing the annual tax-free income threshold for individual taxpayers to Tk 500,000, up from the current limit of Tk 375,000.

In addition, Administrator Abdur Rahim Khan recommended reducing the corporate tax rate for listed companies from 27.5 per cent to 25 per cent.

He further suggested gradually lowering it to 20–22 per cent, noting that without aligning corporate tax rates with competing countries, Bangladesh will struggle to attract foreign investment.

The FBCCI administrator also recommended reducing the turnover tax and withholding tax on all export-oriented sectors from 1 per cent to 0.5 per cent.

He stated that, in the interest of small and medium enterprises, the VAT rate on the supply of all goods at the local level should be reduced to 2 per cent.

Furthermore, FBCCI proposed imposing a maximum import duty of 1 per cent on machinery, spare parts, industrial raw materials, and inputs not produced domestically, and a maximum of 3 per cent on those produced locally.

The organisation believes this measure would help protect domestic industries.

Obaidur Rahman, president of the Bangladesh Aluminium Manufacturers Association, stated that small factories producing aluminium utensils are shutting down due to rising costs of raw materials and increased gas and electricity prices.

He noted that the government had previously provided VAT exemptions at the production stage to support these import-substituting industries.

However, in the 2019–20 fiscal year, a 7.5 per cent VAT was suddenly imposed at the production stage. He called for reinstating the previous VAT exemption to help these small factories survive under current conditions.

Imran Hasan, secretary-general of the Bangladesh Restaurant Owners Association, remarked, “Those of us who pay VAT are bearing the entire burden. The system has been structured in such a way that even small entrepreneurs are required to hire accountants.”

Kamran T Rahman, president of the Metropolitan Chamber, urged the government to make the upcoming budget business-friendly rather than punitive.

He stated that the effective corporate tax rate in many cases rises to 40–50 per cent, highlighting the need for reduction.

He also suggested that restrictions on cash transactions should be lifted to facilitate a 2.5 per cent reduction in corporate tax.

Abdur Razzaq, senior vice-president of the Real Estate and Housing Association of Bangladesh (REHAB), stated that the current cost of flat registration ranges between 12 and 15 per cent. He called for reducing it to 8 per cent.

Anwar Hossain, former executive member of the Jewellers Association, urged the government to introduce a modern policy framework for the country’s jewellery sector.

He said that a neighbouring country exports jewellery worth US$52 billion and added that Bangladesh’s jewellery industry has failed to enter the export market solely due to the absence of an appropriate policy.

Mosharraf Hossain Chowdhury, president of the Poultry Industries Association, stated that during the tenure of the outgoing interim government, the corporate tax rate for the poultry sector increased from 17 per cent to 27 per cent. He emphasised the need to reduce this disparity.

Abdul Haque, president of the Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA), noted that the country’s annual car market had reached 30,000 units but declined to 10,000 units last year.

He explained that the sharp increase in the US dollar exchange rate has driven vehicle prices beyond consumers’ purchasing capacity.

He also pointed out that the gap in import duties between electric and conventional vehicles stands at 800 per cent and called for its reduction.

At one stage during the business leaders’ speech, the FBCCI administrator announced that the finance minister and the commerce minister would deliver their remarks quickly and depart due to a parliamentary session.

He added that business representatives would have another opportunity to speak afterwards.

In response, several business leaders raised their voices, questioning why the advisory meeting had been arranged if the ministers were unavailable.

They also demanded that FBCCI elections be organised at the earliest opportunity. The meeting subsequently experienced a degree of disorder.

The finance minister argued in favour of presenting a large budget for the upcoming fiscal year. He stated that the country requires time to reform its currently fragile economy.

However, he emphasised that a larger budget remains necessary to alleviate poverty and stimulate investment. He added that the economy must progress beyond its current situation.

The finance minister also remarked that there was no justification for a 40 per cent increase in service charges at Chattogram Port.

He stated that the government would eliminate corruption and barriers to conducting business at the port.

He assured the traders that if businesses inform the government of existing obstacles, authorities will take steps to remove them within the next three months.

Amir Khasru Mahmud Chowdhury added that the government has been in office for only two months and that the Middle East conflict has forced the new administration to incur an additional expenditure of approximately US$4 billion (400 crore).

He also noted that the government has requested additional time from the International Monetary Fund (IMF) to restore economic stability.

Commerce Minister Khandaker Abdul Muktaadir stated that the country cannot progress unless it increases the tax-to-GDP ratio.

He emphasised that people must move away from the perception that they receive no benefits in return for paying taxes.

He explained that the government has a responsibility to ensure national security, infrastructure, and public services, all of which depend on tax revenue.

At the conclusion of the meeting, NBR Chairman Md Abdur Rahman Khan addressed the business community stating, “We will try to provide you with relief in taxes and VAT. I cannot say how much we will be able to offer. However, we will make efforts to remove the obstacles that hinder ease of doing business.”