Reduce advance income tax on pharmaceutical raw materials to 3pc: Simeen Rahman

Simeen Rahman, chief executive officer (CEO) of Transcom Group, has called for reducing advance income tax (AIT) on imported raw materials for the pharmaceutical sector from five per cent to three per cent.

She also stressed the need to widen the country’s tax net.

She made the remarks today, Thursday, at a roundtable discussion titled ‘Budget in Times of Crisis and Public Expectations’ organised by Prothom Alo at the Pan Pacific Sonargaon Dhaka.

Finance and Planning Minister Amir Khasru Mahmud Chowdhury attended the event as chief guest.

Speaking at the discussion, Simeen Rahman said the five per cent AIT deducted at the import stage is never refunded by the National Board of Revenue (NBR). “We are proposing that it be reduced to three per cent,” she said.

She added that, “Similarly, tax deducted at source (TDS) on institutional sales should also be reduced from five per cent to three per cent. This would ease the burden of unrealistic taxation on businesses.”

At the event, Simeen Rahman said, “Talking about reforming the financial sector is easy, but implementing it is difficult. The current government has inherited a range of challenges from the previous administration, and their impact is being felt directly by businesses. As members of the business community, we are suffering every day because of the crisis in the financial sector.”

Describing financial sector reform as a need of the hour, she said, “These reforms are not easy to carry out, but we must move in the direction of right reforms.”

She urged the government to place greater emphasis on increasing the tax-to-GDP ratio and expanding the tax net.

“Our tax-to-GDP ratio currently stands at only six per cent, whereas it should be between 15 and 20 per cent. Direct and indirect taxes should be balanced equally. To achieve this, the tax net must be expanded without increasing pressure on existing taxpayers,” she said.

“We need to move away from the traditional tax system and adopt a digital, transparent and automated framework,” she added.

She also advocated for a uniform VAT rate across all industries nationwide, arguing that disparities create opportunities for manipulation.

Simeen Rahman also presented several recommendations to the finance minister aimed at strengthening the pharmaceutical sector. One of the proposals was to provide duty-free facilities on exports.

She said regulatory duty on imported raw materials intended for export-oriented production should be reduced to zero. “We pay duties to import raw materials and then export the finished products. This raises our production costs compared to other countries,” she said.

She further noted that pharmaceutical exporters should be granted bonded warehouse facilities similar to those available to the garment industry.

Simeen Rahman also called for research and development (R&D) expenditure to be made fully tax-exempt. “It takes five to six years to generate results from R&D, yet we have to bear the tax burden from the very beginning,” she said.

She also requested the removal of the National Board of Revenue (NBR)’s 0.5 per cent expenditure cap on pharmaceutical samples and marketing.

Expressing concern over taxation in the beverage industry, Simeen Rahman said the total tax burden on the sector in Bangladesh stands at 54 per cent, compared to 40 per cent in India and just 20 per cent in Vietnam.

She noted that supplementary duty and turnover tax have increased steadily over the past three years. She urged the government to reduce the minimum tax on the beverage sector from three per cent back to the previous rate of one per cent and to withdraw supplementary duty on bottled water.

The business leader also proposed introducing a ‘sugar tax’ structure to protect public health. “Instead of imposing a flat supplementary duty across the sector, products with higher sugar content should face higher taxes, while those with lower sugar content should be taxed less. This would encourage consumers to choose healthier products,” she said.