Business leaders apprehensive over increase in cost of doing business
While initiatives aimed at boosting revenue and fostering entrepreneurship were welcomed, business experts argue certain decisions like higher VAT on key raw materials and increased taxes on online transactions will undermine export competitiveness and raise the cost of doing business
'Infrastructure for budget execution lacking'
Abul Kashem Khan; Chairperson, Business Initiative Leading Development (BUILD)
I would say that the intentions are good and some initiatives are commendable. For example, there is a proposal for a fund dedicated to SMEs and new investors. There is also an initiative to establish a central bonded warehouse. A new idea of "Free zone" has been introduced. Furthermore, in certain areas, steps have been taken to establish research facilities and laboratories within educational institutions.
On the negative side, some taxes have been imposed in some crucial sectors. These affect the export industry, particularly in the sectors of cotton and man-made fibre. While we have consistently advocated for making our exports more competitive, this approach appears to be inconsistent with the policy of export diversification.
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The imposition of Advance Income Tax (AIT) in certain areas is not an issue. However, the final tax amount is often much lower. The process of refund, rebate, or carry forward of the excess amount is often ineffective. Even when a refund is approved, the procedure tends to be lengthy and complicated.
When the budget is prepared on the same structural framework every year, the plan, while ambitious, often fails during the implementation stage. The existing infrastructure upon which the budget execution depends appears to lack the necessary efficiency and capacity.
Among the positive steps, corporate tax, bank tax, and taxes on mobile businesses have been reduced. This encourages entrepreneurship. At the same time, many entrepreneurs operate online businesses. Yet, the VAT on online transactions has been increased. While encouragement is given on one side, the online sector is being discouraged on the other. Many new entrepreneurs enter the market through online platforms.
So, while there are positive elements in the budget, there is also room for improvement and revision. If the advance payment we make can be adjusted against next year's tax or refunded in time, then we can reinvest that money effectively. Otherwise, the cost of doing business increases and the ease of doing business suffers.
'No reflection of private sector's demands'
Shams Mahmud; President, BTCCI
In recent fiscal years, the national budgets have been formulated neglecting the private sector, and there was hope that this wouldn't be the case this time. Unfortunately, we do not see the reflection of the private sector's demands in this year's interim budget either.
The Chief Adviser himself promotes entrepreneurship, so there was a high expectation that the budget would include a framework to support new types of businesses and ventures to create new jobs.
However, we did not see that happen. Instead, taxes on online services are being increased. This will create a barrier for small and medium online businesses.
So, the issues in the private sector from previous budgets still remain, while political instability has now entered the equation.
Until the elections are held, unrest in the political landscape will prevail. This is hurting existing businesses, let alone attracting new investment. Furthermore, this instability also raises serious questions about how effectively the proposed budget measures can be implemented.
Companies need to make a profit before they can become eligible for being listed. That scope should have been made easier first, only then should these measures have been considered. But right now, there's a gap between listed and non-listed companies.
Instead, corporate tax has been increased. We also expected a higher entry-level threshold for income tax, but that expectation hasn't been reflected in the budget either.
Attracting investment will become even more challenging after LDC graduation. We expected the budget to address the upcoming challenges but it has not.
'RMG industry needs relief, not additional costs'
Sharif Zahir; Chairman, UCB and Managing Director, Ananta Apparels
The FY26 budget reflects a welcome shift toward discipline, reform and governance restoration after years of economic mismanagement. As a business leader across manufacturing and banking, I acknowledge the government's efforts to stabilise macroeconomic fundamentals and emphasise transparency, institutional reform and long-term planning.
From the RMG and textile sector's perspective, while export stability and reduced inflation are encouraging, the increase in VAT on cotton and man-made fibre (MMF) yarns from Tk3 to Tk5 per kg raises serious concern. At a time when we face global demand pressures, energy insecurity, and US tariff hikes, the industry needs relief, not additional costs. I urge the government to remove VAT on the import of raw materials and accessories, and ensure uninterrupted energy supply to support competitiveness and jobs.
In the banking sector, I strongly support the initiatives for Asset Quality Review, forensic audits, and the Bank Resolution Ordinance. These are timely moves to restore depositor confidence and uncover systemic anomalies. However, the continuation of tax on NPL provisions is a burden that hinders responsible restructuring. Like in India and Malaysia, this tax should be exempted to facilitate capital preservation in troubled banks and attract private capital for recapitalisation.
As an individual taxpayer and employer, I appreciate the minor increase in tax-free income thresholds and deductions for critical illnesses. But the middle class and salaried professionals still bear a disproportionate load through indirect taxes and limited fiscal relief. Tax reform must aim for broader compliance, fairness, and digital transparency without creating new harassment points.
Overall, this budget sets the tone for a more accountable, inclusive, and reform-driven future. It moves away from populist spending and focuses on governance, structural reform, and economic resilience. The challenge now lies in execution. If implemented effectively, this budget could become the foundation for rebuilding trust and positioning Bangladesh as a competitive manufacturing and financial hub in the region.
Focus has been kept on the needs of low-income people
Sameer Sattar; Former president of the Dhaka Chamber of Commerce & Industry (DCCI)
In this year's budget, we can see that focus has been kept on the needs of low-income people. This is important as these people are currently facing the main adverse effects of food inflation and a slow business environment. The proposal to support 55 lakh families under its Food-Friendly Programme in the national budget will certainly help the low-income and/or general people all around Bangladesh, especially in terms of food insecurity and inflation.
No matter how contractionary or conservative the budget is, the paramount duty of every government should be to ensure adequate social safety net allocation and, thereby, reduce poverty and social inequality. The reduction of source tax on the income from the supply of certain essential commodities coupled with the step to keep annual income (up to Tk 500,000) from agricultural activities tax-free will also ease the burden on marginal farmers and suppliers and hopefully help in taming food-inflation.
In an environment, where general people are fighting to stay afloat on their current salaries against fluctuating inflation, the fact that the limit of tax-free income will go up, although slight, is helpful. From a business perspective, when companies are already struggling to keep businesses afloat, the increase in the corporate tax rate for non-listed companies to 27.5 percent will be more challenging for investors.
As always, concrete steps should be taken to ensure that the tax net is widened to include the informal sector as well as to collect revenue from places outside Dhaka and Chittagong. For any budget requirements, the focus should be on collecting more revenue from newer sources and not rely on borrowing, which may crowd out private borrowing and investment.
