Staff Reporter :
The Economic Reporters’ Forum (ERF) on Sunday recommended raising the tax exemption threshold for individual taxpayers from Tk 350,000 to Tk 400,000 to ease financial pressure amid rising inflation.
During a pre-budget meeting at the Revenue Building, ERF President Doulot Akter Mala presented the proposal to National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan.
As part of its budget recommendations, the ERF suggested reducing the tax burden on middle- and low-income groups by introducing a refund system via mobile financial services (MFS) for overpaid taxes.
Additionally, it proposed that banks reimburse deducted interest for individuals without taxable income.
The forum also recommended capping the tax rate on essential goods, educational materials, and medical equipment at 5 percent.
Furthermore, it called for a dedicated revenue policy to support small and medium enterprises (SMEs) and facilitate their access to bond facilities.
Among other key proposals, the ERF advocated for keeping private provident funds tax-free and increasing investment in healthcare by raising taxes on tobacco products.
It also recommended setting the highest individual tax rate between 30 and 35 percent, lowering the VAT rate to 7 percent, and collecting wealth tax based on market valuation.
Emphasizing the need to shift towards direct taxation, the ERF proposed comprehensive digitization initiatives.
Given the expansion of large businesses in district and city corporations, it suggested establishing Medium Taxpayer Units (MTUs) alongside the existing Large Taxpayer Units (LTUs).
To ensure transparency in tax exemptions, the ERF urged the NBR to provide clear explanations and revenue loss estimates for each exemption.
Addressing Bangladesh’s upcoming transition from the Least Developed Country (LDC) category, the forum stressed the need for a structural overhaul of the import tariff system.
It noted that tariffs remain higher than the LDC average, with little progress made in reducing them despite years of discussions.
The ERF also highlighted the importance of assessing the impact of all NBR policy decisions to identify the beneficiaries of tax, VAT, and duty exemptions.
It called for increased investment in NBR’s research and statistics division, including the recruitment of skilled personnel to modernize operations and improve efficiency.
On banking taxation, the forum pointed out that a 10-15 percent tax is deducted from interest earned on tax-paid deposits, in addition to excise duty on bank balances.
Given the declining individual savings capacity, it proposed withdrawing excise duty on deposits ranging from Tk 500,000 to 1 million and lowering the tax on interest income.
To prevent fraudulent business loans, the ERF recommended that banks verify business details through the NBR’s database before approving large loans.
It noted that individuals frequently take substantial loans under false pretenses, using the names of drivers, janitors, and office assistants, which complicates recovery efforts. Strengthening verification processes, it argued, would help prevent loan fraud and enhance revenue collection.
Regarding money laundering, the ERF stressed the need for tangible progress in enforcing the 2013 Transfer Pricing Law, which was introduced to combat tax evasion and illicit fund transfers.
For export diversification, the forum proposed extending bonded warehouse facilities to other potential industries, similar to the benefits enjoyed by the ready-made garment sector.
To encourage green industrialization, the ERF suggested maintaining a corporate tax gap of at least 5 percent between conventional and eco-friendly factories, arguing that the current 2 percent incentive is insufficient given the higher investment costs of sustainable industries.
The meeting was attended by ERF’s executive and general members.
