The Dhaka Chamber of Commerce & Industry (DCCI) proposed setting the Value Added Tax (VAT) rate at a single-digit level in the national budget for the fiscal year 2025-26, reports UNB.
The chamber on Tuesday also recommended a 1% VAT rate for informal sector businesses to enhance transparency, reduce operational costs and positively impact the manufacturing sector.
Currently, the standard VAT rate stands at 15%, with multiple lower rates of 10%, 7.5%, and 5% in different sectors, leading to complexities and disputes.
Besides, inconsistent VAT rebate benefits impose extra financial burdens on businesses.
During a pre-budget discussion at the National Board of Revenue (NBR) conference centre, DCCI President Taskin Ahmed presented 42 budget recommendations to NBR Chairman Md Abdur Rahman Khan FCMA.
The proposals focus on expanding the tax net, reducing tax rates, implementing business-friendly policies, reforming the VAT system, protecting local industries, simplifying customs duties and tariffs, and easing individual tax structures.
Taskin Ahmed commended NBR for initiating online tax return submission for all taxpayers.
He noted that although the country has over 11.3 million Taxpayer Identification Number (TIN) holders, only 3.7 million returns were filed from 1 July 2024 to 6 February 2025, with just 1.33 million filed online.
To boost tax compliance, he urged NBR to set short-, medium-, and long-term targets and introduce an automated tax return system for corporations.
Considering rising inflation, Ahmed recommended increasing the tax-free income threshold from Tk 3.5 lakh to Tk 5 lakh. He also proposed a phased reduction in advance tax on commercial imports from 5% and the gradual elimination of advance tax for manufacturers.
He further highlighted discrepancies between customs tariff valuations and market prices, which force businesses to pay excessive duties. To address this, he suggested imposing specific duties instead of tariff value-based assessments.
NBR Chairman Md Abdur Rahman Khan FCMA reiterated NBR’s commitment to reforming trade-related revenue policies to facilitate business and investment. He stressed the need to expand the tax net, ensuring fairness in tax compliance.
He acknowledged that while the number of TIN holders has exceeded 10 million in the past decade, tax return submissions remain disappointingly low.
Khan also said that NBR is working towards fully online corporate tax submission and believes lowering corporate tax rates will encourage proprietorship businesses to transition into corporate entities.
He indicated that the government is open to a single-digit VAT rate, provided businesses demonstrate transparency and willingness to comply.
To improve VAT administration, NBR is prepared to develop software with local IT experts, seeking business community support.
He also affirmed NBR’s interest in making the tax rebate system more generous in the upcoming fiscal year.
DCCI Senior Vice President Rajib H Chowdhury, Vice President Md Salim Sulaiman, and senior NBR officials attended the discussion.
Bd-Pratidin English/ AM
