National Board of Revenue Chairman Md Abdur Rahman Khan on Wednesday hinted that the tax exemption system might be removed in the forthcoming national budget.
He also said that, following this, the NBR had already withdrawn significant tax exemptions.
He said these at a pre-budget meeting with the Bangladesh Export Zone Authority, the Bangladesh Economic Zone Authority, the Bangladesh Investment Development Authority and the Bangladesh Hi-Tech Park Authority.
Some chambers and economic research institutions, including Business Initiative Leading Development, Bangladesh India Chambers of Commerce, Women Entrepreneurs Network for Development Association and American Chamber of Commerce in Bangladesh, were present during the discussion.
The NBR chairman said that the amount of tax that the government was getting now was almost equal to what it was losing due to tax exemptions.
鈥榃e have to come out of this practice. We are facing huge pressure for this,鈥� he added, saying that they could provide support for a limited time, not for the whole life, as one should pay taxes at the regular rate.
He also said that individuals and business entities paying a reduced rate of taxes would have to pay a little bit more from the next budget and the NBR鈥檚 big target was to streamline the tax system for those who had been enjoying tax exemptions for a long time.
He said that the tax exemption would be withdrawn gradually.
In the discussion, BUILD proposed setting a flat VAT rate at 10 per cent, suggesting that it could help improve the government鈥檚 revenue collection.
BUILD said that in addition to the 15 per cent universal VAT rate, there were seven other rates: 1.5 per cent, 2 per cent, 2.4 per cent, 4.5 per cent, 5 per cent, 7.5 per cent and 10 per cent. This brings the total to eight different VAT rates and Section 46(1) of the VAT Law does not allow VAT credit or rebates for rates below 15 percent, it added.
Currently, 53 per cent of economic activities fall outside the VAT system, while the remaining 47 per cent are subject to varying rates across three levels and the rebate system remains largely ineffective, which discourages taxpayers from joining the VAT network.
AmCham emphasised the need for tax reforms and business-friendly policies in their budget proposals for the 2025-26 financial year.
