NBR chief rules out tax cuts, stresses widening tax net

FE REPORT
Chairman of the National Board of Revenue (NBR) Md Abdur Rahman Khan on Wednesday ruled out tax cuts for now, saying the government's priority is to boost revenue collection by widening the tax net.
"Reducing corporate tax and tax deducted at source (TDS) rates is not possible at this stage. Instead, we are working to strengthen the refund management system," he said at a pre-budget meeting with four chambers at the NBR headquarters in the capital.
The meeting was attended by the Dhaka Chamber of Commerce and Industry (DCCI), Bangladesh Chamber of Industries (BCI), Gazipur Metropolitan Chamber of Commerce and Industry, and Sylhet Chamber of Commerce and Industry.
Mr Khan said the revenue authority is considering withdrawing deemed export facilities for local companies providing services under international tenders.
NBR officials said the facility had been introduced to create a level playing field for local firms competing with foreign companies, which are not required to pay VAT. Without it, local firms would have to bear VAT on such supplies.
He also said instructions had been given to ensure tax compliance by building owners at the design approval stage.
The NBR chairman advised businesses to pay 15 per cent VAT and claim input tax credits, noting that the effective burden would be around 3.0 per cent depending on value addition.
He added that truncated VAT rates remain a major concern for many businesses.
Former FBCCI president Mir Nasir Hossain said contractors, particularly in construction and government projects, have limited scope to claim VAT refunds due to low value addition.
"I am not receiving the benefits of being a listed company, as TDS realised exceeds 15 per cent of our profit margin," he said, adding that the provision for carrying forward advance TDS has little practical use.
Shovon Islam of the Gazipur chamber said export-oriented industries are facing mounting challenges and sought policy support for green energy adoption and local production of related equipment.
He also pointed out that the ASYCUDA system is not properly synchronised with Bangladesh Bank, creating difficulties for exporters operating under tight timelines.
"There should be a manual fallback process if technical issues arise," he added.
In response, Mr Khan directed officials to resolve the issue urgently, saying no one has the right to create hurdles for exporters.
BCI president Anwar-Ul-Alam called for reducing TDS on exports to 0.5 per cent from 1.0 per cent, citing global market pressures.
He also urged policymakers to exercise caution in public remarks on fuel and energy issues, warning that such statements create uncertainty among foreign buyers and may discourage orders.
Mr Parvez further called for withdrawal of the 1.0 per cent turnover-based minimum tax, describing it as a burden on small and medium enterprises (SMEs).
He also sought clarification of relevant tax provisions to reduce harassment and proposed a fixed tax regime for small businesses.
The DCCI proposed several measures for the FY2026-27 budget, including cutting corporate tax for non-listed companies to 25 per cent from 27.5 per cent and raising the tax-free income threshold for individuals to Tk 0.5 million.
It also suggested reducing advance tax on commercial imports to 5.0 per cent from 7.5 per cent and fully automating the customs refund system to improve the tax-to-GDP ratio.
Presenting the proposals, MBM Lutful Hadi, convener of the DCCI's Customs and VAT Standing Committee, said the chamber prioritised expanding the tax net, improving revenue capacity, easing the cost of doing business and supporting investment and employment.
In a separate meeting later in the day, representatives from 12 organisations, including the Bangladesh Book Publishers and Sellers Association, Bangladesh Paper Merchants Association, Bangladesh Paper Mills Association, Bangladesh Printing Industries Association, Bangladesh LPG Autogas Station and Conversion Workshop Owners Association, and Bangladesh Furniture Exporters Association, called for tax reductions on imported inputs used in their industries.
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