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Few measures may raise business costs, deter investment: ICAB
Chartered accountants on Wednesday raised concerns that several proposed fiscal measures in the FY26 budget may lead to higher costs for businesses and reduced private-sector investment, especially amid the ongoing economic uncertainties. At a press conference held at its office in the capital, th
FY ’26 Post-budget reactions
Few measures may raise business costs, deter investment: ICAB
Rise in minimum tax main issue
FE REPORT
Published :
Jun 05, 2025 08:27
Updated :
Jun 05, 2025 08:27
Chartered accountants on Wednesday raised concerns that several proposed fiscal measures in the FY26 budget may lead to higher costs for businesses and reduced private-sector investment, especially amid the ongoing economic uncertainties.
At a press conference held at its office in the capital, the Institute of Chartered Accountants of Bangladesh (ICAB) said some measures show promise, especially those aiming at digitisation and administrative simplification, but others may raise the cost of doing business and deter private sector growth.
It urged the government to have a broader dialogue among policymakers, industry leaders, and financial professionals, saying it is essential to refine the budget for sustainable economic recovery and growth.
ICAB President Maria Howlader lauded a landmark inclusion in the budget - the government's recognition of women's unpaid household labour as a contributor to the gross domestic product (GDP) - which she described as a "major policy change".
She expressed concerns about the feasibility of achieving the revenue target without modernising the tax structure and expanding the tax net.
As for individual taxation, she criticised the minimal increase in the tax-free income limit - from Tk 3,50,000 to Tk 3,75,000 - and the rise in minimum tax for marginal taxpayers from Tk 3,000 to Tk 5,000. She urged a higher tax-free threshold of Tk 4,50,000 to offer relief to low-income earners and emphasised the need for a more progressive and equitable tax regime.
Maria opposed the increase in turnover tax to 1 per cent, stating that taxing turnover instead of profit is inconsistent with a fair tax policy.
However, she welcomed other proposals to boost private investment and reduce business costs, including the removal or reduction of supplementary duties and tariffs on several products.
She also appreciated tax measures to rationalise the effective tax rate, including adjustments for bad debts as per IAS/IFRS standards, quarterly filing of withholding tax return, and reduced tax on brokerage commissions and merchant banks.
As for VAT and customs, she praised reduced advance tax on raw material imports and acceptance of ERP books for VAT purposes, while raising concerns about increased VAT on commercial goods and commissions from online sales.
She also expressed concerns over new regulatory duties on essential and healthcare items.
Commenting on macroeconomic risks, the ICAB president warned that borrowing from domestic sources - 12.25 per cent of the total budget - could fuel inflation, which already stands at over 9.17 per cent.
Snehasish Barua, partner at Snehasish Mahmud & Co, presented the keynote at the event.
He emphasised that inflationary pressures - driven by increased money supply and demand - require urgent containment, stressing the need for enhanced market monitoring and stable supply chains to prevent further price hikes.
Besides, he observed that due to the increase in minimum tax under Section 163 of the Income Tax Ordinance, even companies not making taxable profits will face higher tax burdens.
"For large firms with a substantial turnover, this would significantly increase the cost of doing business. For small businesses, more than 50 per cent of their profits may now go to the government, while loss-making companies could see their tax burden rise by 67 per cent." He said that companies listed on the stock exchanges but with less than 10 per cent of their shares floated through initial public offerings (IPOs) will be taxed at the higher rate of 27.5 per cent, equivalent to private companies.
Snehasish suggested the government extend the same condition to follow-on public offerings (FPOs) for consistency. He noted that Bangladesh already has the highest corporate tax rates among the peer countries, such as Vietnam, Indonesia, and Sri Lanka, for public and private limited companies as well as banking institutions.
"A logical and timely reduction in corporate tax is viewed as essential to encourage business activities and investment during this challenging period."
While reduced tax deducted at source (TDS) rates are expected to boost trading, he said, the increased minimum taxes - up by 67 per cent for companies and nearly 300 per cent for individual businesses - could hinder investment in new projects, ultimately affecting the GDP growth.
He advocated for a faster, digitised customs clearance system and urged the National Board of Revenue (NBR) to adopt international best practices, including easing conditions for participation in the authorised economic operator (AEO) programme to encourage self-compliance.
ICAB Chief Executive Officer Shubhashish Bose said the government refrained from increasing indirect taxes, aligning its policies with the World Trade Organisation (WTO) guidelines.
"Such measures are also part of the broader strategy to prepare for the country's LDC graduation."
He termed the budget a "preparatory blueprint" for Bangladesh's transition to a developing economy, with a focus on long-term sustainability, fiscal discipline, and global competitiveness.
Mohammed Humayun Kabir, vice president of the South Asian Federation of Accountants (SAFA) and past president of ICAB, moderated the discussion.
Few measures may raise business costs, deter investment: ICAB
Rise in minimum tax main issue
FE REPORT
Published :
Jun 05, 2025 08:27
Updated :
Jun 05, 2025 08:27
Chartered accountants on Wednesday raised concerns that several proposed fiscal measures in the FY26 budget may lead to higher costs for businesses and reduced private-sector investment, especially amid the ongoing economic uncertainties.
At a press conference held at its office in the capital, the Institute of Chartered Accountants of Bangladesh (ICAB) said some measures show promise, especially those aiming at digitisation and administrative simplification, but others may raise the cost of doing business and deter private sector growth.
It urged the government to have a broader dialogue among policymakers, industry leaders, and financial professionals, saying it is essential to refine the budget for sustainable economic recovery and growth.
ICAB President Maria Howlader lauded a landmark inclusion in the budget - the government's recognition of women's unpaid household labour as a contributor to the gross domestic product (GDP) - which she described as a "major policy change".
She expressed concerns about the feasibility of achieving the revenue target without modernising the tax structure and expanding the tax net.
As for individual taxation, she criticised the minimal increase in the tax-free income limit - from Tk 3,50,000 to Tk 3,75,000 - and the rise in minimum tax for marginal taxpayers from Tk 3,000 to Tk 5,000. She urged a higher tax-free threshold of Tk 4,50,000 to offer relief to low-income earners and emphasised the need for a more progressive and equitable tax regime.
Maria opposed the increase in turnover tax to 1 per cent, stating that taxing turnover instead of profit is inconsistent with a fair tax policy.
However, she welcomed other proposals to boost private investment and reduce business costs, including the removal or reduction of supplementary duties and tariffs on several products.
She also appreciated tax measures to rationalise the effective tax rate, including adjustments for bad debts as per IAS/IFRS standards, quarterly filing of withholding tax return, and reduced tax on brokerage commissions and merchant banks.
As for VAT and customs, she praised reduced advance tax on raw material imports and acceptance of ERP books for VAT purposes, while raising concerns about increased VAT on commercial goods and commissions from online sales.
She also expressed concerns over new regulatory duties on essential and healthcare items.
Commenting on macroeconomic risks, the ICAB president warned that borrowing from domestic sources - 12.25 per cent of the total budget - could fuel inflation, which already stands at over 9.17 per cent.
Snehasish Barua, partner at Snehasish Mahmud & Co, presented the keynote at the event.
He emphasised that inflationary pressures - driven by increased money supply and demand - require urgent containment, stressing the need for enhanced market monitoring and stable supply chains to prevent further price hikes.
Besides, he observed that due to the increase in minimum tax under Section 163 of the Income Tax Ordinance, even companies not making taxable profits will face higher tax burdens.
"For large firms with a substantial turnover, this would significantly increase the cost of doing business. For small businesses, more than 50 per cent of their profits may now go to the government, while loss-making companies could see their tax burden rise by 67 per cent." He said that companies listed on the stock exchanges but with less than 10 per cent of their shares floated through initial public offerings (IPOs) will be taxed at the higher rate of 27.5 per cent, equivalent to private companies.
Snehasish suggested the government extend the same condition to follow-on public offerings (FPOs) for consistency. He noted that Bangladesh already has the highest corporate tax rates among the peer countries, such as Vietnam, Indonesia, and Sri Lanka, for public and private limited companies as well as banking institutions.
"A logical and timely reduction in corporate tax is viewed as essential to encourage business activities and investment during this challenging period."
While reduced tax deducted at source (TDS) rates are expected to boost trading, he said, the increased minimum taxes - up by 67 per cent for companies and nearly 300 per cent for individual businesses - could hinder investment in new projects, ultimately affecting the GDP growth.
He advocated for a faster, digitised customs clearance system and urged the National Board of Revenue (NBR) to adopt international best practices, including easing conditions for participation in the authorised economic operator (AEO) programme to encourage self-compliance.
ICAB Chief Executive Officer Shubhashish Bose said the government refrained from increasing indirect taxes, aligning its policies with the World Trade Organisation (WTO) guidelines.
"Such measures are also part of the broader strategy to prepare for the country's LDC graduation."
He termed the budget a "preparatory blueprint" for Bangladesh's transition to a developing economy, with a focus on long-term sustainability, fiscal discipline, and global competitiveness.
Mohammed Humayun Kabir, vice president of the South Asian Federation of Accountants (SAFA) and past president of ICAB, moderated the discussion.
