The Dhaka Chamber of Commerce & Industry (DCCI) has proposed the introduction of a uniform single-digit Value Added Tax (VAT) rate across all sectors and a nominal 1% VAT for traders in the informal sector, arguing that such measures would enhance transparency in revenue management, reduce the cost of doing business, and benefit the manufacturing sector.
Currently, while the standard VAT rate is 15%, various sectors face differential slabs of 10%, 7.5%, and 5%, leading to operational difficulties and disputes. Many traders also bear an additional tax burden due to the unavailability of input tax rebate benefits.
The proposals were presented by DCCI President Taskeen Ahmed to National Board of Revenue (NBR) Chairman Md. Abdur Rahman Khan, FCMA, as part of the chamber’s budget recommendations for FY2025-26.
A total of 42 proposals were submitted, covering areas such as tax rate reduction, revenue system automation, VAT management reform, and simplification of import duties and tariffs.
Taskeen Ahmed also commended the NBR’s move to fully transition income tax returns online in the upcoming fiscal year. He pointed out that while there are over 10.13 million Taxpayer Identification Number (TIN) holders in Bangladesh, only around 3.7 million tax returns were filed between 1 July 2024, and 6 February 2025.
He proposed setting short, medium, and long-term targets to increase the number of taxpayers and called for an automated tax return system for corporate entities.
Additionally, considering inflationary pressures, he urged an increase in the tax-free income threshold for individuals from Tk3.5 lakh to Tk5 lakh.
To alleviate business costs, DCCI recommended a gradual reduction of advance tax on imports for commercial importers and the phased elimination of advance tax for manufacturers.
The chamber also highlighted discrepancies between customs tariff values and market prices, which force traders to pay higher duties than their actual import costs.
To address this, Ahmed proposed replacing the tariff value system with a fixed customs duty rate.
In response, NBR Chairman Md Abdur Rahman Khan affirmed the board’s commitment to expanding trade and investment through gradual tax reforms.
He acknowledged the disparity between TIN holders and actual taxpayers, emphasising the need for broader compliance.
He also reiterated NBR’s efforts to fully digitize corporate tax returns.
On the matter of VAT reform, Khan indicated that the government is open to implementing a uniform single-digit VAT rate—provided the business community reaches a consensus.
He stressed that accountability and transparency would be key to ensuring such a system’s success.
Additionally, he suggested that NBR could develop an integrated web-based software, utilising local IT expertise, to automate VAT and income tax calculations, audits, and return submissions, thus easing compliance for businesses.
Finally, the NBR Chairman expressed willingness to adopt a more flexible approach to the tax rebate system in the next fiscal year.
DCCI Senior Vice President Razeev H Chowdhury and Vice President Md. Salem Sulaiman were also present at the meeting.
