FICCI calls for broader tax base, competitive investment environment

The Foreign Investors’ Chamber of Commerce and Industry (FICCI) today shared its observations on the National Budget FY2026-27, outlining concerns over revenue mobilisation, tax reforms and the need for a more competitive investment climate.

At a post-budget press meet in Dhaka, FICCI emphasised that sustainable revenue growth and increased investment would require structural reforms, policy predictability and a more competitive business environment, according to a press release issued today (18 June).

As Bangladesh advances towards LDC graduation and seeks to attract greater domestic and foreign investment, FICCI stressed the need to broaden the tax base, reduce the cost of doing business, accelerate digitalisation in tax administration and ensure a level playing field, the statement reads.

The Chamber’s recommendations to strengthen revenue mobilisation, improve compliance, facilitate trade and boost investor confidence were presented by Rupali Haque Chowdhury, President of FICCI, at the press meet.

Speaking at the press meet, FICCI President Rupali Haque Chowdhury described the proposed budget as positive and relatively predictable, according to the statement.

She welcomed the increased allocation for marginalised communities under social protection programmes, noting that effective implementation of these initiatives would significantly improve the quality of life of vulnerable populations.

She also appreciated the substantial allocations for the education and health sectors, stating that these investments would play a vital role in strengthening Bangladesh’s human capital in the long term.

While acknowledging the country’s continued reliance on remittance inflows, she emphasised the need to prioritise education and skills development to build a more productive workforce and urged stronger focus on vocational and employment-oriented education, according to the press release.

Welcoming the incentives for green initiatives and solar energy, Rupali said these would reduce dependence on fossil fuels and the impact of global oil price volatility, describing them as a forward-looking step towards sustainable growth.

Highlighting inflation as the most pressing challenge, she noted the target to reduce it from around 9.5% to 7.5% and stressed the need for a clear strategy and roadmap, according to the statement.

Referring to revenue targets, Rupali said deficits are often met through higher indirect taxes and duties, raising the Effective Tax Rate (ETR), and called for a more balanced and predictable tax regime.

She also welcomed the government’s initiative to reduce its reliance on commercial bank borrowing by exploring alternative sources of financing. 

Rupali underscored the need for clear policy direction and a well-defined implementation framework to ensure the effectiveness of such measures.

The FICCI president emphasised that expanding the tax net should remain a top priority.

The Chamber recommended bringing non-filers under the tax system, making Proof of Submission of Return (PSR) mandatory for licence and permit issuance and renewal, introducing PSR requirements for VAT return submissions, and implementing a 360-degree cross-checking mechanism between suppliers’ tax returns and withholding tax records, according to the press release.

Snehasish Barua FCA, tax consultant of FICCI, presented the Chamber’s detailed observations. To improve efficiency and transparency, FICCI urged the National Board of Revenue (NBR) to adopt a comprehensive automation roadmap integrating Customs, VAT and Income Tax systems while ensuring interoperability with relevant government agencies.

The Chamber also called for continuous enhancement of existing digital platforms to strengthen revenue mobilisation and fiscal transparency.

FICCI highlighted the importance of a fair and competitive business environment, proposing the establishment of a dedicated Data and Analytics Team within NBR to analyse market share against revenue share across industries as a quick-win initiative to improve the tax-to-GDP ratio.

The Chamber also recommended moving towards a unified VAT rate, gradually removing input tax credit restrictions and VAT Deducted at Source (VDS), and establishing a more standardised VAT regime, the statement reads.

To attract and retain investment, FICCI called for a roadmap to optimise Bangladesh’s Effective Tax Rate (ETR), including lower corporate tax rates, a gradual shift to a cashless economy, phased reduction of minimum tax, withdrawal of inadmissible expense provisions and a review of the Personal Income Tax (PIT) structure, according to the statement.

The Chamber also underscored the need for customs reforms to enhance trade competitiveness. Recommendations included assessing import duties based on actual transaction or global reference values, ensuring proper classification of raw materials and intermediate goods, facilitating smoother customs clearance for capital machinery, and gradually eliminating non-tariff barriers in preparation for LDC graduation.

In addition, FICCI urged the government to conduct Time Release Studies (TRS) to expedite cargo clearance, cap price increases at no more than 15% across industry tiers and withdraw the proposed Supplementary Duty (SD) hike on raw materials, the statement added.

FICCI reiterated its commitment to working closely with policymakers and stakeholders to strengthen revenue collection, improve the ease of doing business and position Bangladesh as a more competitive destination for local and foreign investment.