Investors raise concerns over high duties, inconsistent tax policy
PRI Chairman Dr Zaidi Sattar called for reducing supplementary duty rates, particularly at the import stage
Representatives of multinational companies have voiced concern over Bangladesh's inconsistent tax policy and high rates, saying unpredictability is creating challenges for investment.
"Over the last three years, our tax rate has increased… It's hard to predict what the tax rate will be next year," said Ahmet Zahit Erdem, head of finance at Coca-Cola Bangladesh Beverage Limited, at a seminar today (3 February).
"Our tax rate is very high," he added.
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The seminar titled "Review of Revenue Performance in Bangladesh: With Special Focus on Supplementary Duty and Excise", was organised by the Policy Research Institute (PRI).
Entrepreneurs from the tobacco sector echoed these concerns, noting that combined taxes on tobacco products currently stand at around 83%, an extremely high level, they said.
They recommended replacing the existing ad-valorem tax system with a specific tax system, citing the importance of predictability for industry stability and warning that excessive taxation may encourage illegal trade.
In recent budgets, beverage sector entrepreneurs have faced successive tax increases. The minimum tax on beverage products rose from 0.5% to 3% in FY23, followed by increases in supplementary duty and customs duty on imported raw materials in subsequent budgets. These changes have left investors apprehensive about potential new tax hikes.
Participating in the seminar, National Board of Revenue (NBR) Member Syed Mushfequr Rahman highlighted discrepancies between companies' financial statements and their tax and VAT payments.
"Many companies pay tax based on financial statements, but their VAT payments are much lower than expected," he said, noting that this points to governance challenges.
The NBR official also defended the government's reliance on supplementary duty, which accounts for 30% of VAT revenue and 60% of import revenue.
"We can't eliminate it overnight," he said.
Chairing the seminar, Dr Zaidi Sattar, chairman of PRI, called for reducing supplementary duty rates, particularly at the import stage, noting that duties on 1,700 tariff lines are significantly higher at import than at the local level – contradicting WTO principles.
"Once Bangladesh graduates from LDC status, maintaining such high import-stage duties will no longer be feasible," he added.
The keynote paper was presented by PRI Research Director Bazlul Haque Khondker.
Other speakers included PRI Executive Director Khurshid Alam, NBR First Secretary Md Moshiur Rahman, and Abu Zahid Parag, senior manager of Fiscal Affairs at British American Tobacco Bangladesh. Hafiz Choudhury, principal of The M Group Inc., spoke virtually.
