Tax Uncertainty Tops Bangladesh Pre-Budget Talks
Foreign business chambers have raised concerns over tax unpredictability, rising fiscal burden and trade policy imbalances during a pre-budget consultation in Dhaka, urging the government to create a more stable and investor-friendly environment.
The issues were highlighted at a discussion organised by the European Union Chamber of Commerce in Bangladesh with the National Board of Revenue (NBR), where European businesses cautioned against preferential trade measures that could distort competition.
“We are looking with concern at how Bangladesh is providing trade preferences to other partners that will create an unfair playing field for European businesses,” said Nuria Lopez, Chairperson of EuroCham, in a written statement. She, however, did not specify the countries or nature of such preferences.
The concern comes in the backdrop of Bangladesh extending certain trade benefits to the United States last year following the imposition of reciprocal tariffs, in a bid to narrow the bilateral trade gap.
The meeting also saw discussions around corporate tax incentives, particularly for the ready-made garment (RMG) sector. Currently, green garment factories enjoy a concessional tax rate of 10%, while other units pay 12%, significantly lower than the standard 25–27% rate.
Responding to demands to extend similar benefits to women entrepreneurs, NBR Chairman Abdur Rahman Khan indicated that such concessional rates may not continue, signalling a possible policy shift toward tax rationalisation.
In the previous budget, authorities had already initiated steps to gradually align reduced tax rates for the textile sector with standard corporate tax levels.
Foreign investors emphasised the need for predictable and transparent tax policies to sustain investment flows. EuroCham called for fixed timelines for regulatory approvals, stressing that uncertainty in decision-making hampers business operations.
“Tax policy must support investment, not discourage it. The increasing tax burden on multinational companies is a concern,” Lopez said, adding that Bangladesh should also pursue a Free Trade Agreement (FTA) with the European Union to strengthen trade ties.
The chamber further urged the government to simplify VAT and customs procedures and eliminate administrative bottlenecks that act as non-tariff barriers.
The American Chamber of Commerce in Bangladesh echoed similar concerns, calling for gradual corporate tax reductions and the introduction of structured tax stability frameworks for large-scale investments.
AmCham President Syed Ershad Ahmed stressed that consistent tax policies are critical for investor confidence and long-term planning. The chamber recommended simplifying tax structures, addressing double taxation issues, rationalising minimum tax rates and improving VAT refund mechanisms.
It also called for aligning domestic regulations with international standards, clearer guidelines on tax holidays, and institutional reforms such as the planned separation of the NBR.
Meanwhile, the Bangladesh-China Chamber of Commerce and Industry highlighted concerns over high taxes on foreign nationals investing in property.
BCCCI President Khorshed Alam noted that many Chinese professionals prefer investing in markets like Singapore and Malaysia due to significantly lower tax rates, compared to Bangladesh where rates can exceed 35%.
The discussions underscore growing pressure on Bangladesh to balance revenue generation with competitiveness, particularly as it seeks to attract and retain foreign investment. Stakeholders maintain that policy consistency, tax rationalisation and regulatory reforms will be key to sustaining investor confidence in the coming fiscal cycle.
