Foreign investors have urged Bangladesh to ensure a stable, transparent and investor-friendly environment in the upcoming budget, with a strong focus on tax reforms, policy predictability and reduced bureaucratic hurdles.
The recommendations came during month-long pre-budget consultations involving multiple foreign business chambers, which also stressed the need for better infrastructure, efficient ports and faster public services.
The Foreign Investors’ Chamber of Commerce and Industry (FICCI) called for a predictable tax regime, proposing higher tax-free income thresholds and restructuring of lower tax slabs. It said high withholding taxes and disallowed expenses often push effective tax rates above statutory levels, urging rationalisation.
FICCI also highlighted VAT complexities, noting that many firms are unable to claim legitimate input credits due to administrative barriers. It proposed simplifying the system and easing compliance requirements. In customs, it recommended strict adherence to transaction value rules, wider use of provisional assessments and simplification of the Authorised Economic Operator (AEO) scheme.
FICCI President Rupali Haque Chowdhury said a modern, predictable tax system is essential as Bangladesh prepares for post-LDC competition.
The American Chamber of Commerce in Bangladesh proposed a 5% cash incentive on card-based payments to boost digital transactions and recommended allowing direct application of tax rates under Double Taxation Avoidance Agreements (DTAA).
It also suggested adjusting withholding tax rates and maintaining a uniform 37.5% corporate tax for local and foreign banks. To support digital payments, it proposed cutting duties on smart cards and POS machines and reducing supplementary duty on carbonated beverages.
Further proposals included VAT exemptions for garment waste recycling services and lower taxes for non-resident investors.
AmCham Joint Secretary Sanwar Hossain said tax parity in banking and preferential rates for offshore units would help attract investment and strengthen exports.
The Bangladesh China Chamber of Commerce and Industry proposed capping the top personal tax rate at 20% and waiving surcharge on assets up to Tk 100 crore, alongside increasing local sourcing in the garment sector.
Meanwhile, European Union Chamber of Commerce in Bangladesh called for simpler procedures, investment-friendly tax policies and progress on an EU free trade agreement, while urging better policy implementation.
The Association of Mobile Telecom Operators of Bangladesh sought removal of VAT on SIM services and supplementary duty on OTT platforms, and criticised dual VAT on spectrum as double taxation. It said operators pay about 56% of revenue in taxes, with average user income below Tk 150, raising sustainability concerns.
Bangladesh’s FDI rose from $913 million in 2010 to over $3.6 billion in 2019 but has slowed in recent years, with inflows dropping to $550 million in FY25, the lowest in five years.