Predictable tax regime: Rates likely to be set for next five years
Investors have long argued that tax rates should remain stable for at least 5 years
The government is considering setting tax rates in a more predictable framework – long sought by local and foreign investors – with the upcoming budget expected to outline rates for up to five years.
The rates introduced in last year's budget were set for a two-year period, covering FY2026-27 and FY2027-28. This means the upcoming budget will provide an indication of tax rates for the next five years.
An NBR senior official involved in tax policy formulation, speaking on condition of anonymity, told The Business Standard that businesses have long demanded a predictable tax regime.
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He said investors and businesses want certainty over tax rates for at least three to five years to support long-term planning. "This year, we may be able to indicate tax rates for the next five years."
The idea of a predictable tax system has been a long-standing demand from both local and foreign investors. The Foreign Investors Chamber of Commerce and Industry (Ficci), the country's largest foreign investor lobby group, has repeatedly called for a stable and forward-looking tax framework.
Debabrata Roy Chowdhury, director of legal and corporate affairs at Nestlé Bangladesh, described the initiative as a welcome step. He said foreign investors have long argued that tax rates should remain stable for at least five years to support investment planning.
"If we can know the tax rates for the next five years, it would certainly be an investment-friendly move," he told The Business Standard.
Businesses typically face uncertainty ahead of national budgets due to frequent tax changes, some of which can also affect income and expenditure from previous fiscal periods.
Snehasish Barua, tax expert and managing director of SMAC Advisory Services Limited, said the move towards predictability is positive and reflects a key demand from the business community.
However, he cautioned that predictability alone may not be sufficient to attract investment. "If higher tax rates are locked in under a predictable system, it will not be investment-friendly.
Global trends show tax rates are declining, and higher rates could discourage foreign investment," he said.
