Foreign investors urge no new tax pressure in budget amid Mideast war shock

Foreign investors have urged the government not to impose any new tax burdens in the upcoming budget amid the ongoing Middle East conflict as foreign and local businesses in Bangladesh have been under pressure for over two years.

"We are cautious. The global situation has created an energy crisis shock," said Rubaba Dowla, country managing director at Oracle Bangladesh, Nepal and Bhutan, during a pre-budget meeting at the National Board of Revenue (NBR) headquarters in Dhaka today (6 April).

"If the budget introduces another policy shock, it will create a double crisis for us," she added at the event attended by representatives of the Foreign Investors Chamber of Commerce and Industry (FICCI).

FICCI President Rupali Haque Chowdhury said the government must balance employment generation with revenue collection. "Increasing taxes on those already paying will hinder business expansion," she said.

Rupali, also managing director of Berger Paint, added, "Until last year, our company was posting negative earnings. This year, growth is barely 1%. I know some firms have seen up to 25% negative growth."

The market is gradually declining, which is preventing companies from expanding, she said. 

She urged a level playing field for tax collection from foreign companies, introducing end-to-end automation in NBR's tax operations, and broadening the tax base.

She also called for a reduction in the effective tax rate by gradually abolishing the existing minimum tax, eliminating Advance Income Tax at the import stage, lowering VAT from 15% to a standard 10% for all, and assessing imports based on transaction value rather than arbitrary customs valuations.

"The perception that all businesses are corrupt must end. You must have some trust in us. We are not all responsible for the actions of a few," she said.

At the meeting, Mohammad Iqbal Chowdhury, CEO of LafargeHolcim Bangladesh PLC, and Snehasish Barua, advisor to FICCI, presented various proposals on income tax, VAT, and customs.

Iqbal Chowdhury recommended a long-term automation roadmap to ensure that NBR's digitisation efforts continue smoothly, even amid leadership changes. He also highlighted how bureaucratic complexities and delays in importing capital machinery can negatively impact investments.

Following the meeting, he told The Business Standard, "A project scheduled to start within a year often delayed up to two years due to multiple approvals required for importing capital machinery."

Barua proposed lowering corporate tax rates to attract foreign investment, noting that Vietnam and Indonesia maintain rates of 20% and 22%, while Bangladesh's remains at 27.5%, making the country less competitive. He also highlighted how various disallowances increase effective tax rates for investors.

NBR Chairman Md Abdur Rahman Khan acknowledged certain organisational challenges and outlined initiatives taken over the past 18 months to improve transparency and digitisation in tax administration.