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The American Chamber of Commerce in Bangladesh (AmCham) said that the targets in the proposed national budget for financial year 2025-26 are positive but ambitious, given the current economic conditions marked by high interest rates and investment constraints. 

In a statement on Monday, the chamber said that the strict policies have helped limit inflation’s rise but continue to erode savings and hamper investment growth.  

Moreover, Bangladesh’s foreign reserves and remittances are improving gradually, and revenue collection shows modest gains.  

However, simplifying the tax system and increasing the tax-to-GDP ratio remain vital.  

The proposed hike of Advance Tax to 7.5 per cent would be punitive for businesses and consumers, the statement added. 

AmCham stressed the need for lowering the current high interest rates (13 per cent–15 per cent) to stimulate economic growth. 

Moreover, they also opposed the proposals to legalise undisclosed money whitening, emphasising transparency and anti-corruption.  

The budget’s fiscal burden is heavy, with 57 per cent of allocations for salaries, subsidies, and debt servicing, and 22 per cent going to interest payments.  

Increased reliance on indirect taxes and Advance Income Tax would raise concerns about fairness, the statement added. 

While foreign loans with longer terms can ease fiscal pressure, excessive local borrowing risks crowding out private investment, it added. 

It also stated that there were insufficient measures to develop the capital market. 

The NBR’s revenue target of Tk 4,99,000 crore is cautiously optimistic.  

Initiatives like electronic tax deduction at source, stricter VAT registration, curbed exemptions, a uniform 15 per cent VAT rate, and expanding digital tax filing would support the LDC graduation process.  

A 30 per cent tax rate reintroduction for high earners and VAT exemptions for eco-friendly products and key industries are positive measures. 

Lowering the annual turnover threshold for businesses to Tk 50 lakh from Tk 3 crore would encourage SMEs.  

However, policy instability, law and order concerns, and currency volatility might undermine investor confidence. 

The corporate tax rate for non-listed companies will rise to 27.5 per cent, while listed firms remain at 20 per cent. 

Merchant banks may benefit from a tax cut from 37.5 per cent to 27.5 per cent, boosting the financial sector. 

The budget allocates Tk 100 crore for the youths and raises the loan ceiling for young entrepreneurs to Tk 5 lakh, reflecting focus on youth empowerment.  

AmCham encouraged further steps like investment summits and law and order improvements to bolster investor confidence.