Businesses Seek Tax Relief as Finance Minister Cites Fiscal Constraints

Businesses Seek Tax Relief as Finance Minister Cites Fiscal Constraints

The finance minister has defended plans for a large national budget in the upcoming fiscal year, arguing that Bangladesh needs time to stabilise and reform its fragile economy.

Business leaders across sectors have put forward a broad set of proposals ahead of the 2026–27 budget. Their demands include cuts to corporate, turnover and withholding taxes, exemptions from value-added tax (VAT) at the production stage for selected goods, and a reduction in flat registration costs.

They say the industrial sector is under mounting pressure from multiple fronts, including an energy crisis linked to the Iran war, persistent inflation and high interest rates. In this context, they argue that policy support is critical to restoring confidence in business and investment.

Responding to the proposals, Finance Minister Amir Khasru Mahmud Chowdhury struck a cautious tone. “It may sound disappointing, but even if we wish, we may not be able to offer such benefits in the upcoming budget,” he said. “However, we will work to remove barriers to doing business. The private sector must drive economic growth.”

The demands were presented at 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 new budget.

The meeting was held on Wednesday morning at a hotel in the capital, with the finance minister attending as chief guest. Commerce Minister Khandaker Abdul Muktaadir, ICC Bangladesh President Mahbubur Rahman and former FBCCI President Mir Nasir Hossain were also present. The session was chaired by NBR Chairman Md Abdur Rahman Khan, while FBCCI Administrator Md Abdur Rahim Khan outlined the business community’s budget proposals.

Calls for corporate tax cuts

Among key proposals, FBCCI recommended raising the tax-free income threshold for individuals to Tk 500,000 from the current Tk 375,000.

It also called for reducing the corporate tax rate for listed companies from 27.5 percent to 25 percent, with a longer-term target of bringing it down to 20–22 percent. Without aligning tax rates with competitor countries, business leaders warned, Bangladesh risks losing out on foreign investment.

FBCCI further proposed cutting turnover and withholding taxes on export-oriented sectors from 1 percent to 0.5 percent. It also recommended reducing VAT on local supplies to 2 percent to support small and medium enterprises.

Additionally, the organisation suggested capping import duties at 1 percent for machinery, spare parts and raw materials not produced domestically, and at 3 percent for locally produced inputs, to protect domestic industries.

Sector-specific concerns

Business leaders highlighted a range of industry-specific challenges.

Obaidur Rahman of the Bangladesh Aluminium Manufacturers Association said small aluminium utensil factories are shutting down due to rising raw material costs and higher gas and electricity prices. He urged the government to reinstate VAT exemptions at the production stage, which were withdrawn in the 2019–20 fiscal year.

Imran Hasan of the Restaurant Owners Association said the VAT system places a disproportionate burden on compliant businesses, forcing even small operators to hire accountants.

Kamran T Rahman of the Metropolitan Chamber argued that the effective corporate tax rate can reach as high as 40–50 percent, calling for a more business-friendly budget. He also suggested easing restrictions on cash transactions to enable a reduction in corporate tax.

Abdur Razzaq of REHAB called for cutting flat registration costs from the current 12–15 percent to 8 percent, while Anwar Hossain from the jewellery sector urged the government to adopt a modern policy framework to unlock export potential.

Mosharraf Hossain Chowdhury of the Poultry Industries Association pointed out that corporate tax in the sector has risen sharply—from 17 percent to 27 percent—and called for corrective measures.

Abdul Haque of BARVIDA said the country’s automobile market has shrunk significantly, with annual sales dropping from 30,000 units to 10,000 last year, largely due to the depreciation of the taka. He also highlighted an 800 percent duty gap between electric and conventional vehicles and called for rationalisation.

Tensions briefly rose during the meeting when it was announced that the finance and commerce ministers would leave early due to parliamentary commitments. Several business leaders protested, questioning the purpose of the consultation if ministers were unavailable. Calls were also made for early elections within the FBCCI, leading to a degree of disorder.

Government stance

The finance minister reiterated the need for a larger budget to support poverty reduction and investment, despite fiscal constraints. He also criticised a recent 40 percent increase in service charges at Chattogram Port, pledging to address inefficiencies and corruption.

“If businesses identify specific obstacles, we will act to remove them within three months,” he said.

He added that the government, in office for only two months, has already faced significant financial pressure due to the Middle East conflict, which has added roughly $4 billion in expenditure. He also confirmed that Bangladesh has sought additional time from the International Monetary Fund (IMF) to stabilise the economy.

Commerce Minister Khandaker Abdul Muktaadir stressed the need to raise the country’s tax-to-GDP ratio, arguing that public services, infrastructure and national security depend on tax revenues.

Closing the session, NBR Chairman Md Abdur Rahman Khan assured the business community that efforts would be made to provide some relief. “We may not be able to meet all expectations,” he said, “but we will work to ease the barriers to doing business.”