Tax Burden May Hurt Recovery Despite Positive Budget Targets, FICCI Warns
NN Online:
The Foreign Investors’ Chamber of Commerce and Industry (FICCI) acknowledged the Government’s commitment in the National Budget 2025-26 towards equitable economic transformation and fiscal consolidation. With a proposed budget size of Tk. 7,90,000 crore (12.7% of GDP), the government has targeted 6.5% GDP growth and a projected decline in inflation to 8%, a significant drop of 321 basis points. FICCI views the budget’s reform direction as positive; however, the implementation of certain tax measures may create unintended burdens on industries and individuals. These observations were shared by Zaved Akhtar, President of FICCI, at a post-budget press meet held today at FICCI.
FICCI expressed concern over increased tax burdens on compliant individuals and businesses. The Chamber noted that under the revised tax slabs, salaried individuals earning between Tk. 70,000 and Tk. 100,000 per month may face a 50%-60% higher tax burden, while those earning between Tk. 120,000 to Tk. 175,000 may experience an increase of 20%-30%. This could significantly reduce disposable income for the fixed-income group, affecting consumption and quality of life.
FICCI also noted that the increased minimum tax from 0.6% to 1% for companies and from 0.25% to 1% for individuals would adversely impact SMEs, loss-making companies and inflation-stricken individuals. For instance, a company earning no taxable income will still be liable to pay 1% tax on turnover, creating further strain on struggling entities.
Another point of concern is the imposition of a discriminatory 27.5% corporate tax rate for listed companies having less than 10% public shareholding. Furthermore, the benefits of reduced rate tax for companies having cashless transaction have been withdrawn. This, FICCI believes, goes against the goal of deepening capital markets and attracting quality listings.
The Chamber also highlighted the steep increase in VAT on online sales from 5% to 15%, which will likely hinder the growth of Bangladesh’s emerging digital commerce sector. Similarly, the rise in customs duty on beverage concentrates from 10% to 15% could negatively impact consumer prices and industry margins.
FICCI reaffirmed its long-standing recommendation for a simplified and harmonized VAT system with a single rate and standard input credit mechanism. The Chamber appreciated the government’s continued push towards digital transformation through automation in tax administration and implementation of the National Single Window.
FICCI commended the government’s target to raise Tk. 4,99,000 crore through NBR (88% of total revenue) and welcomed initiatives to modernize tax administration and separate tax policy from tax collection functions. However, FICCI emphasized the need for realistic revenue targets and effective execution plans to avoid creating undue burdens on compliant taxpayers.
According to projections, GDP growth is expected to rise by 157 basis points from FY24-25, while inflation is forecasted to fall sharply from double digits to 8% by June 2025. While this presents a positive macroeconomic outlook, FICCI warned that higher minimum taxes and increased burdens on corporates and individuals could undercut this recovery trajectory.
FICCI reiterated the importance of inclusive tax policy reforms, emphasizing the need for a stable and predictable tax environment, along with a rationalized rate structure that fosters compliance and encourages investment. The Chamber remains steadfast in its commitment to collaborating with policymakers to achieve shared economic objectives, attract foreign direct investment (FDI), and support Bangladesh’s transition to a financially resilient future. FICCI Advisers and former Presidents Rupali Haque Chowdhury and Naser Ezaz Bijoy also shared their insights on the Finance Ordinance 2025.