Businesses seek policy reforms, tax relief ahead of FY27 budget

Business leaders at a pre-budget discussion yesterday (14 May) called for sweeping policy reforms, reduced tax burdens and stronger industrial support, arguing that the current taxation regime is discouraging investment and hurting local manufacturing.

Speaking at an NTV programme in the capital's Tejgaon titled "Kemon Budget Chai" ahead of the FY2026–27 national budget, Bangladesh Knitwear Manufacturers and Exporters Association President Mohammad Hatem said the existing tax structure was "completely against investment and business."

While acknowledging some recent government initiatives, including efforts to reopen closed factories, Hatem said businesses are still struggling under what he described as an "oppressive" tax system.

"We expect policy support more than anything else," he said. "Every year we discuss the budget, but ultimately we see no real outcome."

Explaining the burden of Advance Income Tax (AIT), Hatem said a small or medium-sized export-oriented factory with an annual export turnover of Tk100 crore has to pay around Tk1 crore in AIT.

"To justify Tk1 crore in tax at a 12% corporate tax rate, a company would need to make more than Tk8 crore in profit, which is unrealistic for a small factory," he said.

He also criticised the lack of tax adjustments and refunds, saying exporters are forced to pay additional taxes through TDS and on fixed deposits linked to export facilities.

The BKMEA president urged the government to ease the tax burden on businesses, saying, "Please give us some relief from this oppression. We simply cannot afford it anymore. Every year, our core capital base is shrinking because of this kind of taxation system."

Bangladesh Textile Mills Association President Showkat Aziz Russell also stressed the need for a reasonable and acceptable budget, warning that industrial competitiveness is being undermined by inconsistent policies.

Referring to the ongoing gas crisis, he said production across industries had been affected due to inadequate energy supply.

Highlighting challenges faced by the textile sector, Russell said that current import policies were discouraging local yarn manufacturing.

"If you import cotton, there is a 2% tax, while importing yarn becomes easier. That effectively discourages domestic manufacturing," he said.