Budget FY26: AmCham says increasing advance tax to 7.5% will be 'punishing for all businesses, customers' | The Business Standard
Skip to main content
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • Subscribe
    • Get the Paper
    • Epaper
    • GOVT. Ad
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
The Business Standard

Friday
July 25, 2025

Sign In
Subscribe
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • Subscribe
    • Get the Paper
    • Epaper
    • GOVT. Ad
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
FRIDAY, JULY 25, 2025
Budget FY26: AmCham says increasing advance tax to 7.5% will be 'punishing for all businesses, customers'

Economy

TBS Report
02 June, 2025, 08:20 pm
Last modified: 03 June, 2025, 01:54 pm

Related News

  • Naharul Islam appointed as Unilever MD
  • BAT Bangladesh Q2 profit drops 81%, revenue plunges 23% amid Dhaka factory shutdown
  • Leather expo showcases Bangladesh’s growing capacity, export potential
  • Govt okays proposed tariff structure for Chattogram Port, rates to rise by up to 440%
  • Five Rohingyas cross into Bangladesh to escape torture by Arakan Army: RRRC official

Budget FY26: AmCham says increasing advance tax to 7.5% will be 'punishing for all businesses, customers'

It also says targeting a 6.5% inflation rate and 5.5% GDP growth is positive but appears overly ambitious given current conditions

TBS Report
02 June, 2025, 08:20 pm
Last modified: 03 June, 2025, 01:54 pm
Budget FY26: AmCham says increasing advance tax to 7.5% will be 'punishing for all businesses, customers'

Increasing the advance tax on commercial imports from 5% to 7.5% in the upcoming fiscal year 2025-26 (FY26) will be punishing for all businesses and customers, the American Chamber of Commerce in Bangladesh (AmCham) said in an immediate reaction to the budget proposal presented by Finance Adviser Salehuddin Ahmed today (2 June).

The chamber noted that the interim government has set a target of 5.5% GDP growth for FY26 while aiming to contain inflation and steer the economy toward recovery through reforms and amendments, according to a press statement issued to the media.

To this end, AmCham recommended prioritising fiscal health, adopting a contingency approach, and initiating policy reforms in key procedural areas.

The Business Standard Google News Keep updated, follow The Business Standard's Google news channel

Currency and growth control

While the target of 6.5% inflation and 5.5% GDP growth is a positive signal, AmCham said it appears overly ambitious under current economic conditions. Although strict policy measures have helped control inflation, they are also eroding savings and stifling investment growth.

The budget size has dipped to 12.65% of GDP. While reserves and remittance inflows have shown improvement, and revenue collection has slightly increased, the chamber stressed the need to simplify taxation and improve the tax-to-GDP ratio.

AmCham opposed the proposed increase in Advance Tax to 7.5%, warning it would burden both businesses and consumers, especially when VAT evasion remains unaddressed. The chamber also called for a reduction in the current high interest rate (13-15%) to spur growth.

Revenue reform, fiscal restraint

While stricter rules on asset legalisation are expected, AmCham expressed strong opposition to the proposal allowing the whitening of black money, saying it undermines transparency and encourages corruption.

The chamber recommended cutting unnecessary expenditures and deferring non-essential projects, noting that 57% of the budget is allocated to salaries, subsidies, and debt servicing – of which 22% goes to interest payments.

AmCham warned that growing reliance on indirect taxes and additional Advance Income Tax (AIT) raises equity concerns. However, it lauded the government's plan to reform the direct tax system, which it believes could significantly enhance domestic revenue and promote social justice.

The chamber also stressed the need for foreign loans with longer repayment terms to ease pressure on the economy, while warning that excessive local borrowing would crowd out private sector investment. It added that the budget lacks adequate measures to strengthen the capital market.

Structural reforms

AmCham welcomed the planned separation of the National Board of Revenue (NBR) into policy formation and revenue collection wings, calling it a positive structural step. However, it flagged the increased complexity in the Statutory Regulatory Orders (SROs) and called for urgent resolution.

The chamber appreciated proposed tax and duty reforms, as well as the digitalisation of company regulations and trade licenses. However, it emphasised the need to rationalise HS codes, fully automated customs clearance, and eliminate manual signatures to reduce bureaucratic delays. 

Sectoral allocations

Among the top 10 ministries and divisions, eight are receiving reduced allocations, while two – Secondary and Higher Education, and Road Transport and Highways – will see increases.

AmCham expressed concern over the downsizing of the Primary and Mass Education Ministry by around Tk5,000 crore. Meanwhile, the health sector has been allocated Tk41,908 crore, marking a notable increase.

Tax system modernisation

The NBR's revenue target of Tk4,99,000 crore reflects cautious optimism, AmCham said.

The introduction of an electronic platform for tax deduction at source, tighter VAT registration, curbed exemptions, a uniform 15% VAT rate, and broader digital tax filing will support the country's transition ahead of its LDC graduation.

A 30% income tax rate for high earners has been reintroduced, and VAT exemptions have been proposed for eco-friendly products. Manufacturers and importers of cold storage equipment, buses, paper goods, pharmaceuticals, cancer treatment devices, and green industries will also benefit.

Corporate tax

AmCham praised the reduction in annual turnover thresholds for small businesses – from Tk3 crore to Tk50 lakh – and welcomed tax changes for mobile operators as positive steps to stimulate business activity.

However, it warned that inconsistent policies, concerns over law and order, and exchange rate volatility are eroding investor confidence.

While the corporate tax rate for non-listed companies will rise to 27.5%, the 20% rate for listed firms remains unchanged. Merchant banks, meanwhile, may see a reduction from 37.5% to 27.5%, which the chamber views as a move to support the financial sector.

Sustainable employment and economic balance

AmCham highlighted that while rising remittance flows have helped the economy, a more calculated and sustainable approach is needed. Unemployment remains high, and private sector hiring continues to lag.

While public projects have created employment opportunities, AmCham called for more permanent, private-sector-driven solutions. The focus on the education sector is a step in the right direction, the chamber said.

Future-ready economy to meet global challenges

Bangladesh's edge in the global market lies in its infrastructure and trade, AmCham noted.

However, inefficiencies at Chattogram and other ports are hampering investment growth. The chamber stressed the urgency of addressing climate risks through targeted funding and incentives aligned with the country's "net zero" goals.

Given recent US tariff developments and the subsequent drop in exports, AmCham urged the government to prepare for potential risks once the current 90-day tariff pause ends.

Looking forward, the FY26 budget reflects several key considerations – Bangladesh's LDC graduation in December 2026, ongoing IMF loan conditions, and evolving trade dynamics.

AmCham called for bold structural reforms, better coordination of fiscal and monetary policies, simplified tax systems, and long-term employment strategies beyond public works.

Youth engagement has been prioritised, with Tk100 crore allocated for a "Youth Festival" and the loan ceiling for young entrepreneurs raised to Tk5 lakh to promote self-employment. These initiatives, AmCham said, could unlock the potential of Bangladesh's young population.

Execution is key

"Investing in this new Bangladesh is not a choice – it's an economic imperative," the chamber stated. By ensuring appropriate budgetary allocations to education, technology, energy, and health, the country can chart a path toward a more inclusive and sustainable future.

AmCham concluded by stressing that successful execution, measured in both quantity and quality, will ultimately determine the impact of the budget.

Bangladesh / Top News

AmCham / Bangladesh / Budget FY2025-26

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • Representational image. File photo: TBS
    Govt okays proposed tariff structure for Chattogram Port, rates to rise by up to 440%
  • Hasina and Taposh in an event in 2020. Photo: Collected
    Al Jazeera investigation: Hasina, in call with Taposh, talks using helicopter to shoot, crush protesters in July uprising
  • The Chinese Ambassador Yao Wen and Sayeda Jasmin Sultana Milky, director general of Global Health Emergence  Response Wing of the foreign ministry, received the team in the airport last night (24 July). Photo: Chinese embassy/Facebook
    Chinese medical team arrives in Dhaka to treat Milestone crash victims

MOST VIEWED

  • Representational image/Reuters
    Dollar gets upward push as BB buys $10m more in auction at even higher rate
  •  ABM Khairul Haque. File Photo: Collected
    Former chief justice Khairul Haque detained
  • File photo of Bangladesh Bank. Photo: TBS
    Governor Mansur orders withdrawal of BB dress code after directive draws criticism
  • Representational image. Photo: Collected
    Tariff talks: Bangladesh, US set for crucial virtual meeting on 29 July
  • Mehreen Ahmed speaking to media on 11 July 2025. Photo: Collected
    Court disposes of Dhaka girl's case against parents seeking 'protection from abuse'
  • Hasina and Taposh in an event in 2020. Photo: Collected
    Al Jazeera investigation: Hasina, in call with Taposh, talks using helicopter to shoot, crush protesters in July uprising

Related News

  • Naharul Islam appointed as Unilever MD
  • BAT Bangladesh Q2 profit drops 81%, revenue plunges 23% amid Dhaka factory shutdown
  • Leather expo showcases Bangladesh’s growing capacity, export potential
  • Govt okays proposed tariff structure for Chattogram Port, rates to rise by up to 440%
  • Five Rohingyas cross into Bangladesh to escape torture by Arakan Army: RRRC official

Features

Illustration: TBS

The future of medicine: How innovations will catalyse quantum leaps in healthcare

5h | The Big Picture
Photo: Collected

24 July: More than 1400 arrested, 3 missing coordinators found

1d | Panorama
Photo: Mehedi Hasan/TBS

Aggrieved nation left with questions as citizens rally to help at burn institute

2d | Panorama
Photo: Mehedi Hasan/TBS

Mourning turns into outrage as Milestone students seek truth and justice

2d | Panorama

More Videos from TBS

There are many more examples of trials of Chief Justices in the world.

There are many more examples of trials of Chief Justices in the world.

3h | TBS Today
Why is there a massive conflict between Thailand and Cambodia?

Why is there a massive conflict between Thailand and Cambodia?

4h | TBS News Updates
Former Chief Justice ABM Khairul Haque in prison

Former Chief Justice ABM Khairul Haque in prison

4h | TBS Today
The Nvidia Chip Deal Trades Away the United States’ AI Advantage

The Nvidia Chip Deal Trades Away the United States’ AI Advantage

4h | Videos
EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Advertisement
  • Privacy Policy
  • Comment Policy
Copyright © 2025
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net