No new tax on businesses in upcoming budget: Commerce minister

Commerce Minister Khandakar Abdul Muktadir has assured that the government will not impose any additional tax burden on businesses in the upcoming national budget despite mounting fiscal pressures.

Reducing the cost of doing business and easing access to government services are essential to boost private sector investment and trade, he made the remarks while addressing a pre-budget discussion organised by the Dhaka Chamber of Commerce and Industry (DCCI) at a hotel in Dhaka today (13 April). 

The minister acknowledged that the government is under significant financial strain due to what he described as "over-ambitious projects" undertaken by the previous administration.

He noted that although Bangladesh's economy is valued at around $460 billion, nearly 70 million people remain below the poverty line, while the number of taxpayers is still relatively low.

Muktadir also pointed to the country's limited energy storage capacity, which forces reliance on higher-cost fuel imports from the spot market amid ongoing geopolitical tensions in the Middle East.

Emphasising the need for expansion of the tax net, DCCI President Taskeen Ahmed said sustaining economic growth would require automation and simplification of revenue collection systems.

He proposed raising the tax-free income threshold to Tk5 lakh, capping the maximum personal income tax rate at 25%, aligning the tax rates of non-listed companies with those of listed ones and abolishing the advance VAT system. 

The business leader also called for modernisation of financial sector policies to ensure stability, reduction of non-performing loans, stabilisation of foreign exchange reserves, and rationalisation of policy interest rates to encourage manufacturing investment.

He highlighted the need for uninterrupted energy supply, diversification of export products and markets, and targeted incentives for promising sectors in the upcoming budget.

Mahbubur Rahman, president of the International Chamber of Commerce Bangladesh, observed that although calls to increase the tax-to-GDP ratio have persisted for years, there has been limited effective action.

He said that high lending rates, reduced credit flow to the private sector, and ongoing power and energy shortages are discouraging both domestic and foreign investment. 

Mahbubur urged the government to explore alternative energy import sources and reduce reliance on intermediaries, while ensuring a stable and predictable policy environment.

Monzur Hossain, member (secretary) of the General Economics Division, emphasised that reviving sluggish economic growth remains a key priority for the government, underscoring the importance of promoting the cottage, micro, small, and medium enterprises sector and strengthening research activities to expand investment.

Former DCCI President Rizwan Rahman highlighted that bureaucratic complexities and alleged harassment from the tax authority are severely affecting the private sector.

He noted that the lack of effective initiatives to expand the tax net is increasing pressure on existing taxpayers and called for grassroots-level investment incentives along with higher allocations for healthcare and education. 

Another former DCCI President Hossain Khaled said that only about 30% of transactions occur through formal channels, limiting effective revenue collection, and suggested that the current VAT system could be replaced with a GST framework.

KM Rezaul Hasanat David, president of the Bangladesh Independent Power Producers' Association, said expressed concern over delays in establishing a land-based LNG terminal and stressed the importance of expanding energy storage capacity and attracting joint and foreign investment. 

Chief Economist of Bangladesh Bank Akhand Mohammad Akhtar Hossain emphasised the need to increase foreign investment, ensure accountability in government service delivery, and control inflation.

Participants across the four thematic sessions on income tax and VAT, financial sector, industry and trade, and infrastructure emphasised the need for comprehensive reforms, including automation of the revenue system, realistic tax collection targets, uninterrupted energy supply, improved infrastructure, stable exchange rates, lower lending rates, and stronger governance in the financial sector. 

DCCI members, economists, researchers, and representatives from both public and private sectors also attended the event.