Next budget to see cuts in tax waiver: NBR chairman

NBR chairman Md Abdur Rahman Khan today (5 March) announced that next national budget may witness a significant cut in the tax exemption system.

"This time [in budget for 2025-26 fiscal] you will see some big examples. Already we have withdrawn some significant number of tax exemptions, you will see the rest in the next budget," he said.

The National Board of Revenue chairman was speaking at a pre-budget meeting with BEZA, BIDA, ΒΕΡΖΑ, Business Initiative Leading Development (BUILD), Bangladesh Hi-Tech Park Authority, Bangladesh India Chambers of Commerce, Women Entrepreneurs Network for Development Association (WEND) and American Chamber of Commerce in Bangladesh (AmCham) held at NGR Conference Room.

He said that the individuals and business entities which are paying reduced rate of taxes will have to pay little bit more from the next budget.

"We can provide support for a limited time, this can not be done for the whole life, one should pay taxes at the regular rate," he said.

Rahman Khan mentioned that this time the big target for the NBR is to streamlining the tax system for those who are enjoying tax exemptions for a long time.

Giving reference of a research, he said that the amount of tax that the government is getting right now is also the amount the government is loosing in the name of tax exemption.

"We have to get rid from that, we are having huge pressure for this (tax exemption)," he said.

He said that the tax exemption will be withdrawn gradually.

The NBR chairman said that his organisation will chase those who are not paying taxes and VAT properly.

In this connection, he said that it does not mean that the consumers get the benefits of the tax exemption directly.

"Rather a big portion of this tax exemptions remains with the business people, there is a widespread complaint regarding this matter although this should not be done," he said.

The government of Bangladesh since its independence had announced a series of tax exemption measures different times aimed at attracting both local and foreign investment, promoting industrialisation, and fostering economic growth.

Under the policy, businesses in key sectors such as agriculture, information technology, renewable energy, and export-oriented industries gets benefit from significant tax relief. Startups and small and medium enterprises (SMEs) are also set to receive exemptions designed to encourage entrepreneurship and job creation.

According to NBR, it introduced targeted tax benefits to stimulate growth in priority sectors. This move was expected to ease financial pressure on businesses and encourage long-term investment.

One of the key highlights of the policy is the extension of tax holidays for new industrial undertakings. Businesses in designated economic zones and hi-tech parks will enjoy tax exemptions for up to 10 years, depending on their investment size and industry type. Export-oriented businesses will also benefit from reduced corporate tax rates, designed to enhance the country's competitiveness in global markets.

In the agriculture sector, companies involved in the production and processing of agricultural goods, including dairy and fisheries, will receive tax exemptions aimed at ensuring food security and promoting rural development.

The information and communication technology (ICT) sector, a rapidly growing contributor to Bangladesh's economy, is also get benefit. Software developers, IT-enabled service providers, and e-commerce businesses also enjoy tax breaks.

While Bangladesh's tax exemption policies aim to attract investment and promote economic growth, experts are increasingly wary of their negative impacts on revenue collection, economic equality, and long-term development.

Critics argue that these measures often lead to significant revenue losses for the state. Bangladesh already struggles with a narrow tax base, and generous exemptions further limit the government's ability to fund essential public services like education, healthcare, and infrastructure.

Another concern is the potential for misuse and lack of transparency. Experts caution that businesses sometimes exploit tax exemptions without making the promised investments or creating jobs. In some cases, politically connected companies benefit disproportionately, raising questions about fairness and governance.

Moreover, the long-term impact on economic efficiency is also debated. Tax breaks can discourage innovation and productivity if businesses rely on incentives rather than improving competitiveness.

As Bangladesh moves toward becoming a middle-income country, experts call for reassessing tax exemption policies. They recommend a more balanced approach — offering targeted incentives while strengthening tax administration and ensuring fair revenue collection. Without careful reform, the negative impacts of tax exemptions could outweigh their intended benefits.