The government is set to offer major tax relief to individuals and businesses in the national budget for the fiscal year 2026-27 by introducing a system to refund excess minimum tax payments, addressing a long-standing concern of taxpayers and investors.
Under a proposed framework, individuals will be able to claim refunds for excess tax payments within 120 days, according to officials familiar with the matter.
For companies, any excess minimum tax that cannot be adjusted against future tax liabilities will be refunded after three years, during which businesses will first be allowed to carry forward the surplus and offset it against future profits.
Finance Minister Amir Khosru Mahmud Chowdhury is expected to present the provision in the Parliament on June 11.
The initiative aims to make the tax system fairer and reduce the burden on taxpayers who often pay minimum tax even when they report losses or have low taxable income.
Under the current system, companies must pay minimum tax based on turnover or gross receipts, regardless of whether they make a profit or incur losses.
Although the law says excess payments should be refunded when final tax liability is lower, taxpayers and analysts say these refunds are rarely paid on time, if at all.
CURRENT SYSTEM AND CONCERNS
Bangladesh has around 3 crore registered business entities, but only about 30,000 file tax returns, according to National Board of Revenue (NBR) officials. Minimum tax on company turnover ranges from 1 percent to 3.5 percent.
Last year’s budget allowed companies to carry forward excess minimum tax to adjust against future tax liabilities.
Business leaders and tax analysts have long argued that the current minimum tax system is unfair, as it requires firms to pay tax regardless of profitability, and say the lack of a refund mechanism effectively makes excess payments a permanent cost.
“The refund facility for individuals will cover excess tax payments from three sources of income -- salary, financial assets, and agriculture,” a senior NBR official told The Daily Star.
The official added that the refund process will be fully automated, removing the need for individuals or company representatives to visit tax offices.
“Instead, excess payments will be directly credited to their bank accounts through a faceless digital system,” he said.
Welcoming the move, Abul Kasem Khan, chairperson of Business Initiative Leading Development, said, “As businesspeople, our main priority is reducing the cost of doing business. This includes reforming advance income tax, fixing refund delays, and ending the back-and-forth policy approach that has long created uncertainty.”
“We do not want a continuation of the traditional budget approach. Instead, we want innovation, modernisation, and real deregulation,” he added.
Snehasish Barua, managing director of SMAC Advisory Services Limited, said, “Setting clear deadlines for tax refunds is a positive step that can help build public trust and strengthen taxpayers’ rights, especially if people actually receive their excess payments on time.”
However, he said the effectiveness of the system will depend on how well existing rules on minimum tax and refunds are aligned.
Barua said the proposed timeline for individual taxpayers is encouraging, but warned that the three-year waiting period for corporate refunds could create liquidity pressures for businesses. “The three-year wait for corporate refunds is too long. It effectively locks up working capital that businesses need for daily operations and growth,” he said.
He also stressed the need for full digitisation of the refund process.
“For the reform to work in practice, the NBR must fully digitise the refund process. A strong digital system would reduce paperwork, cut delays, and minimise harassment. Ultimately, the success of this initiative will depend not only on the law, but also on how efficiently refunds are processed in practice,” Barua added.
However, former NBR member Apurba Kanti Das sees a challenge. “The proposal is a positive step, but the real challenge will be implementation,” he said.
He added that although Bangladesh already has legal provisions for tax refunds, taxpayers rarely receive them in practice due to lengthy verification processes and administrative complexities.
When asked about the three-year refund period, a senior NBR official said immediate refunds could discourage taxpayers from adjusting their credits against future liabilities.
“That is why the NBR is proposing this structure,” the official added.
