The Foreign Investors' Chamber of Commerce and Industry (FICCI) on Thursday urged the government to implement sweeping structural reforms, including automated tax administration and a broadened tax base to maintain a competitive investment climate ahead of Bangladesh's LDC graduation.
While acknowledging the proposed national budget for the fiscal year FY2026-27 as positive and relatively predictable, the apex chamber of multinational companies emphasised that sustainable revenue growth will require a shift away from over-relying on compliant taxpayers.
The observations were shared by FICCI President Rupali Haque Chowdhury at a post-budget press briefing held at the chamber’s office in Dhaka on Thursday.
To address fiscal deficits without adding extra burdens on existing compliant businesses, FICCI emphasized that expanding the tax net must remain a top policy priority.
The chamber recommended making the Proof of Submission of Return (PSR) mandatory for all license renewals, permit issuances, and VAT return submissions.
It also called for a 360-degree cross-checking mechanism between suppliers' tax returns and withholding tax records to curb evasion.
Presenting the detailed technical observations, FICCI Tax Consultant Snehasish Barua urged the National Board of Revenue (NBR) to adopt a comprehensive automation roadmap that fully integrates Customs, VAT, and Income Tax systems.
As an immediate "quick-win" strategy to improve the tax-to-GDP ratio, the chamber proposed establishing a dedicated Data and Analytics Team within the NBR to analyze market share against revenue share across industries.
FICCI voiced concerns that recurrent hikes in indirect taxes and supplementary duties have pushed the Effective Tax Rate (ETR) in several domestic sectors much higher than in competing economies.
To retain and attract foreign direct investment (FDI), the chamber demanded a clear roadmap to optimize the ETR. Key recommendations included: lowering corporate income tax rates by reintroducing cashless transaction conditions for unlisted companies, transitioning the country to a fully cashless economy within the next five years, gradually reducing the minimum tax on sales and withdrawing inadmissible expense provisions, reviewing the Personal Income Tax (PIT) structure to cushion taxpayers against inflation and easing Trade and Customs Bottlenecks.
In preparation for LDC graduation, the chamber underscored the need for urgent customs reforms to boost trade competitiveness.
FICCI recommended assessing import duties based on actual transaction values or global reference benchmarks, simplifying customs clearance for capital machinery, and carrying out regular Time Release Studies (TRS) to speed up cargo clearance.
The chamber also urged the government to withdraw the proposed Supplementary Duty (SD) increases on industrial raw materials and adopt a uniform, moderate price adjustment cap of no more than 15 percent across all industry tiers to maintain a non-discriminatory business ecosystem.
Rupali Chowdhury also lauded the fiscal incentives announced for green initiatives and solar energy, noting that the forward-looking strategy would insulate the domestic power sector from global oil price volatility.
However, pointing to the government's inherited inflation challenges, the FICCI chief stressed that while the target to cool inflation down from 9.5 percent to 7.5 percent is commendable, the government must provide a transparent, step-by-step implementation roadmap to achieve it.
FICCI Vice President Mohammad Iqbal Chowdhury, Director Habibur Rahman Bhuiyan, and Executive Director T I M Nurul Kabir were also present at the briefing.
Representing foreign investors from 35 countries, FICCI's 210 member companies currently generate around 30 percent of the government's internal revenue and represent over 90 percent of inward FDI in Bangladesh.