The Foreign Investors’ Chamber of Commerce and Industry on Sunday urged the government to build a transparent, predictable, and investor-friendly tax system in Bangladesh.
In the pre-budget discussion with the National Board of Revenue chairman, Abdur Rahman Khan, on the upcoming national budget of the financial year 2026-27, the FICCI also emphasised a rational and efficient tax framework to sustain investment, support growth, and enhance revenue mobilisation.
Rupali Haque Chowdhury, president of FICCI, said that Bangladesh stands at a pivotal moment as it prepares for graduation from the least developed country status in November of this year.
‘To realise our full economic potential and remain globally competitive, we need a strategic reform agenda that delivers a standardised, predictable, and automated tax system,’ she added.
A risk-based audit approach would ease the burden on compliant taxpayers and also allow authorities to focus more effectively where intervention is needed, she added.
She also said that through inclusive and participatory policymaking, they could build greater investor confidence and strengthen Bangladesh’s position as a leading destination for global investment.
Regarding the customs duty, the chamber urged to apply a flat 1 per cent duty on the import of capital machinery spare parts, even if imported separately, from existing 25 per cent on separate import but 1 per cent on importing with machinery.
The chamber also urged a reduction in the minimum value of Light Liquid Paraffin (LLP) — a key raw material for essential cosmetic products — from $1,300 per tonne to $700 per tonne.
Currently, only eight designated industries—furniture, electronics, food processing, light engineering, steel products, plastic goods, leather goods, and readymade garments—are allowed to import raw materials for export-oriented production against bank guarantees.
The chamber proposed to include the FMCG sector in this facility.
Currently, imports of coffee—whether in bulk or as finished products—are subject to a total tax incidence of 55.60 per cent, including a 25 per cent customs duty, 3 per cent regulatory duty, and 20 per cent supplementary duty.
The FICCI proposed introducing a separate HS code for bulk imports, reducing the customs duty 10 per cent from 25 per cent, and fully withdrawing the supplementary duty.
Moreover, breakfast cereal imports are currently subject to a 25 per cent customs duty, 3 per cent regulatory duty, and 20 per cent supplementary duty, resulting in a total tax incidence of 53.60 per cent TTI for finished goods.
The chamber called for the complete withdrawal of both the supplementary and regulatory duties to make finished breakfast cereals more affordable for consumers in Bangladesh.
The powdered milk imports are subject to a 10 per cent customs duty, 15 per cent value-added tax, and a 3 per cent advance tax.
Considering milk an essential commodity, FICCI proposed exempting all duties and VAT at both the import and sales stages to make the product more affordable for consumers.
FICCI said that the corporate tax rate for foreign commercial bank is 40 per cent whereas tax rate for local listed commercial bank is 37.5 per cent.
They urged to reduce the tax at a rational level.
Currently, a 1 per cent advance tax at source is applied on total export earnings, which is treated as a minimum tax. FICCI proposed to reduce the rate to 0.5 per cent for all exporters; this tax should not be considered as a minimum tax.
The maximum allowable expense is capped at 6 per cent of turnover or 15 per cent of net profit, whichever is lower. The FICCI proposed introducing a provision allowing expenses up to 6 per cent of turnover.
A 5 per cent withholding tax is currently deducted on any excess payment over life insurance policy premiums. FICCI urged the abolition of this provision on tax deduction at source.
It also urged to increase the tax-free income ceiling to Tk 400,000 from existing Tk 375,000.
Carbonated and sweetened beverages currently face a very high tax burden, cumulative 54 per cent (15 per cent VAT, 30 per cent supplementary duty and import duties).
FICCI recommended the reduction of SD from 30 per cent to 15 per cent.
Currently, a 10 per cent supplementary duty is imposed at the supply stage on paints and varnish and the FICCI proposed withdrawing this 10 per cent supplementary duty on the sector.
It also highlighted that high withholding tax rates and broad expense disallowances are significantly increasing the effective tax burden beyond statutory rates.
The chamber urged rationalisation of WHT rates and alignment with actual tax liabilities to prevent cascading taxation.
FICCI also underscored the need for an integrated digital tax system linking income tax, VAT, and customs to improve efficiency, reduce duplication, and enable data-driven enforcement.
The chamber also stressed the importance of expanding the tax base, noting that the current system places a disproportionate burden on compliant taxpayers.
It also recommended focusing on formalisation, simplified compliance, and stronger enforcement to bring more entities into the tax net.
In his speech, NBR chairman Abdur Rahman Khan said that corporate tax returns would be fully shifted online next year, which would significantly reduce taxpayers’ hassle when dealing with tax offices.
He also said that the audit selection process has already been automated and they would also automate the selection method accordingly.
He also said that they have taken steps to streamline procedures for bond facilities, which previously required extensive manual processing.
‘We have developed and are using automated systems, particularly the customs bond management system. It has been integrated with global port operation systems. For commercial invoices, we have integrated with the Bangladesh Bank so that documents that earlier required physical submission can now be obtained automatically,’ he added.
