DCCI proposes e-corporate tax system, VAT collection app

The Dhaka Chamber of Commerce & Industry (DCCI) has proposed the introduction of an e-corporate tax return system and a mobile app to streamline VAT collection across the country. 

The proposals were presented at a pre-budget discussion for the 2026-27 fiscal year held at the National Board of Revenue (NBR) headquarters in Agargaon today (22 April).

Speaking on behalf of DCCI, Acting Secretary General Dr AKM Asaduzzaman Patwari outlined key recommendations aimed at simplifying tax compliance and enhancing revenue collection.

The chamber proposed raising the tax-free income threshold for individuals to Tk5 lakh, gradually phasing out surcharge, and reducing tax deducted at source (TDS) on deposit interest.

It also recommended lowering the corporate tax rate for non-listed companies from 27.5% to 25%, particularly for firms complying with banking and digital transaction requirements. For listed securities, DCCI proposed maintaining the TDS rate at 5%.

According to the proposal, the e-corporate tax system would allow businesses to file returns online through a fully integrated digital platform, reducing paperwork, time and costs. It would also include automated processes for appeals and tax refunds through bank transfers.

DCCI further suggested allowing taxpayers to carry forward excess TDS to the next fiscal year or claim refunds within 90 days.

The chamber said such measures would improve transparency, reduce errors, and encourage more companies to get listed on the stock market.

However, National Board of Revenue Chairman Abdur Rahman Khan said, "We have to increase revenue collection, not reduce taxes. To do that, we have to expand the tax net."

He added that while reducing corporate tax and TDS rates is not possible, the revenue authority is working to strengthen the refund management system.

He also said instructions have been given to ensure proper tax compliance by building owners during plan approvals.

He advised former Federation of Bangladesh Chambers of Commerce and Industry president Mir Nasir to pay 15% VAT and claim input VAT refunds, noting that the effective rate would not exceed around 3% after considering value addition.

He also identified truncated VAT rates as a key reason behind difficulties faced by many businesses.

Mir Nasir, however, said construction firms and government contractors often lack the scope to claim refunds due to value addition constraints.

"I am not getting the benefits of being a listed company, as TDS realised taxes exceed 15% of our profit margin," he said, adding that the provision to carry forward advance TDS offers little practical relief.

Bangladesh Chamber of Industries (BCI) President Anwar Ul Alam Parvez urged reducing TDS on exports to 0.5% from 1%, citing mounting challenges for exporters.

He also called for removing the provision of a 1% turnover tax as a minimum tax, describing it as a major barrier for SMEs, and sought clarification of Sections 147, 212 and 127 to prevent taxpayer harassment.

He further proposed introducing a fixed tax amount for small enterprises.

According to UNB, DCCI submitted a total of 54 proposals for the FY2026-27 national budget, including 16 key recommendations covering income tax, VAT, customs, automation of tax administration and measures to facilitate business and investment.

The chamber emphasised expansion of the tax base and simplification of the tax structure as core objectives, proposing business-friendly tax policies, automation, VAT reforms, protection for local industries and simplified import duty and tariff structures.

Among the major income tax proposals, DCCI recommended increasing the tax-free income threshold and restructuring tax slabs.

Under the proposal, income up to Tk500,000 would remain tax-free, followed by 5% tax on the next Tk200,000, 10% on the next Tk300,000, 15% on the next Tk400,000, 20% on the next Tk500,000, and 25% on the remaining income.

It also highlighted that Bangladesh's tax-GDP ratio remained low at 6.7% in FY2025, with a large portion of economic activity outside the formal system, and proposed integrating databases such as national ID, banking, trade licences, utilities, vehicle registration and land ownership through a central API to identify potential taxpayers.

Among further measures, DCCI recommended reducing withholding tax on interest from corporate deposits from 20% to 10%, gradually abolishing surcharge over three to five years, lowering minimum turnover tax, withdrawing the increase in advance tax on imports, removing the Tk50,000 cap on VAT refunds, and automating customs refunds through direct bank transfers.

It said these measures aim to expand the tax base, improve compliance, reduce business costs, encourage investment, enhance automation and strengthen revenue mobilisation, ultimately supporting economic growth and employment.