The measures, such as the reintroduction of a wealth tax, a reduction in various tax exemptions and concessions, higher withholding tax on export incentives, and an expansion of the withholding tax regime, are being considered for the upcoming FY 2026–27 national budget, according to sources at the National Board of Revenue (NBR) and the Ministry of Finance.

These potential steps are raising concerns among entrepreneurs and businessmen who are large and regular taxpayers. They fear that the government may ultimately seek to address the substantial revenue shortfall by placing additional burdens on existing taxpayers instead of broadening the tax base by bringing new taxpayers into the system.

The proposed budget size for the next fiscal year is BDT 9.3 trillion, while the revenue collection target is being discussed at BDT 6.95 trillion, according to relevant sources. In this context, the NBR is reviewing tax exemptions, exploring ways to expand the tax net, and considering various options to generate additional revenue from high-income individuals and businesses.

Business concerns are also being driven by the weak revenue collection performance during the current fiscal year. Revenue collection during the first ten months (July–April) of FY 2025–26 stood at approximately BDT 3.27 trillion, according to NBR data. During the same period, the shortfall against the target reached nearly BDT 1.04 trillion. Consequently, there is growing concern that the revenue target may be missed for the tenth consecutive year.

Business leaders say they do not dispute the need for higher revenue collection. But they warn that repeatedly imposing new taxes or increasing the tax burden on the same group of taxpayers, without visible progress in expanding the tax base, could undermine investment, business expansion, and employment generation.

The most effective way to improve the tax-to-GDP ratio is to identify and bring new taxpayers into the system, according to organisations representing large industries and the corporate sector. They argue that placing additional pressure on the relatively small number of individuals and businesses that already pay taxes regularly could ultimately weaken revenue collection in the long run.

Commenting on the issue, Kamran Tanvirur Rahman, president of the Metropolitan Chamber of Commerce and Industry, told Bonik Barta, “What we’re hearing is that existing taxpayers may be subjected to even higher taxes. How much more can a regular taxpayer pay? We’ve always said that the taxpayer base must be expanded. If the authorities continue to place additional pressure on those who are already paying taxes instead of bringing in new taxpayers, eventually they too will no longer be able to bear the burden.”

“We’re a country of 170 to 180 million people. Are only 10 to 15 percent of the population taxpayers? Does no one else have the capacity to pay taxes? Of course they do,” he added.

Senior banking executives have also expressed similar concerns. According to them, the lack of meaningful progress in expanding the tax net has repeatedly resulted in additional burdens being placed on regular taxpayers and compliant individuals and businesses.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, told Bonik Barta, “There are many professionals and businesspeople in the country who earn substantial incomes but do not pay taxes to the government. The NBR, meanwhile, continues to impose various conditions on responsible businesspeople and professionals who regularly pay taxes. Even those who are willing to comply with the rules are consequently becoming inclined to conceal their assets.”

In his view, greater emphasis should be placed on identifying new taxpayers and expanding the tax net in order to increase revenue collection. The willingness of regular taxpayers to pay taxes may be undermined otherwise. “We certainly support taking the necessary measures to increase revenue. But such measures should be adopted after considering all aspects. It’s not enough to focus on just one part of a country’s economy; the entire picture must be taken into account. Nothing should be done that discourages people from keeping their money in banks,” he said.

A section of business leaders and economists has also questioned the accuracy of official estimates regarding the country’s low tax-to-GDP ratio. According to them, the actual size of Bangladesh’s GDP has long been a subject of debate. If a reassessment of GDP produces a different estimate, prevailing perceptions regarding the tax-to-GDP ratio could also change.

Commenting on the issue, Kamran Tanvirur Rahman said, “If the GDP figure is inaccurate, then the tax-to-GDP ratio will also change. If the actual GDP is somewhat lower, the tax-to-GDP ratio will automatically be higher.”

One of the most widely discussed issues in the business community in recent times has been the possibility of introducing a wealth tax. Policymakers have been discussing various alternatives to replace the existing wealth-based surcharge system with a new form of wealth tax, according to relevant sources. Proposals under consideration include imposing a tax of up to 1 percent on individuals with substantial wealth.

Discussions regarding the possible taxation of inherited assets have also raised concerns among many stakeholders. On this issue, Syed Mahbubur Rahman said, “Many people who inherit property don’t have a regular source of income. Even many assets don’t generate a steady income. So where would they obtain the money to pay such a tax?”

Authorities are also reviewing existing tax exemptions, SRO-based incentives, tax holidays, and various sector-specific tax concessions. Business leaders fear that even if nominal tax rates remain unchanged, a reduction in tax benefits could significantly increase the effective tax burden on businesses.

Economists argue that Bangladesh’s tax-to-GDP ratio has remained extremely low for many years. Consequently, there is no alternative to increasing revenue collection in order to finance spending on infrastructure, healthcare, education, and social protection programmes. They believe that priority should be given to reforming the tax system and broadening the tax base to increase revenue collection.

Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development, said, “Our tax-to-GDP ratio is extremely low. Without increasing revenue collection, it won’t be possible to sustain development activities. The government must expand the size of the budget to finance development expenditure, social spending, and its other responsibilities, and there’s no alternative to increasing revenue to achieve that goal.”

The issue is not simply about raising tax rates; rather, comprehensive reforms are needed across the entire tax system, including income tax, wealth tax, and tax administration, according to Mujeri. The rationale behind various tax incentives and exemptions that have remained in place for years should also be reassessed.

He further said, “Tax incentives and concessions are generally provided for a specific period so that a sector can build capacity and become competitive. But in Bangladesh, a perception has developed in many cases that once a concession is granted, it should continue indefinitely.”

In his view, entrepreneurs must gradually move away from dependence on government support and tax incentives and instead focus on improving productivity and efficiency.

Commenting on the debate surrounding the tax-to-GDP ratio, Dr Mujeri said, “GDP statistics certainly need to be made more accurate. But even if the figures are revised, the tax-to-GDP ratio won’t suddenly rise to 15 or 20 percent. There may be some adjustments, but our revenue collection rate will still remain low overall. So, the necessary reforms to increase revenue must be implemented.”

Entrepreneurs in the export sector have also expressed concern. Policymakers are considering increasing the withholding tax on cash export incentives from 10 percent to 20 percent, according to sources familiar with discussions at the NBR and the Ministry of Finance. If implemented, the measure could generate an additional BDT 9 billion in revenue, according to relevant officials.

Export-oriented industrialists argue that additional tax burdens could weaken the capacity of the export sector when businesses are already facing intense global competition, rising production costs, and preparations for Bangladesh’s graduation from the Least Developed Country (LDC) category.

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association, told Bonik Barta, “We’re concerned about a budget of BDT 9 trillion and a revenue collection target of BDT 7 trillion. The reason is that the tax base hasn’t expanded. If the tax base doesn’t grow, this target will ultimately fall on a limited number of taxpayers. That’s where our concern lies.”

Highlighting the need for structural reform of Bangladesh’s tax system, he said, “Taxes are supposed to be levied on profits. But in many cases, taxes are being imposed on sales. Even if I incur losses, I still have to pay taxes. This goes against the fundamental principle of taxation.”

According to him, certain elements of the existing tax regime, including advance tax, minimum tax, wealth-based surcharges, and various withholding taxes, are viewed by businesses as unfair.

The revenue authorities are considering increasing withholding taxes at the supply stage of essential commodities. The withholding tax on the supply of at least 28 agricultural and food products, including rice, lentils, wheat, edible oil, potatoes, and onions, could be raised from 0.50 percent to 1 percent, according to proposals currently under discussion.

To boost revenue collection, policymakers are also discussing a range of proposals to increase import duties on essential consumer goods. Among these, sugar is one of the most widely debated items.

The Bangladesh Sugar & Food Industries Corporation (BSFIC) has proposed increasing import duties on both raw and refined sugar with the objectives of reducing unsold inventories at state-owned sugar mills, protecting loss-making mills, and generating additional government revenue, according to relevant sources. The proposal has been forwarded through the Ministry of Industries and is currently under consideration by the finance ministry and the National Board of Revenue (NBR).

Bangladesh’s annual sugar demand is approximately 1.8 million tonnes, while the production capacity of state-owned sugar mills is no more than 40,000–45,000 tonnes, according to official documents. Despite the production cost of sugar at operational state-owned mills exceeding BDT 260 per kilogram, imported sugar currently retails in the domestic market at around BDT 100–105 per kilogram. Large quantities of sugar produced by state-owned mills remain consequently unsold.

In response to this situation, BSFIC has proposed restoring the existing 15 percent Regulatory Duty (RD) on raw sugar imports to 30 percent, increasing customs duty from BDT 3,000 to BDT 6,000 per tonne, and imposing a new 15 percent supplementary duty. According to those familiar with the proposal, implementation of these measures could generate an additional BDT 20–30 billion in annual government revenue.

But importers of consumer goods and industrial entrepreneurs have expressed concern over the proposal. They argue that imposing additional duties on an essential commodity that is largely import-dependent would ultimately increase prices for consumers.

Mostafa Kamal, chairman of Meghna Group of Industries, told Bonik Barta, “The existing duties and taxes on sugar are already quite high. Imposing additional duties would increase production costs, and the impact would be passed directly on to consumers. But we understand that the government is generally reluctant to increase duties on essential food products.”

Regarding tax incentives and industrial protection, he said that policy support is often necessary to make domestic industries more competitive. “Policymaking should be based on an assessment of where our comparative advantages lie and which sectors have the potential to build competitiveness. To develop a production-oriented economy, greater emphasis must be placed on building productive capacity,” he added.

Mohammed Amirul Haque, president of the Chittagong Chamber of Commerce and Industry and managing director of Seacom Group, stressed the importance of improving the business environment. He told Bonik Barta, “If Bangladesh is to achieve sustainable economic growth, the first priority should be making the business environment simpler and more transparent. If the business climate is genuinely supportive, businesspeople won’t need to repeatedly demand tax concessions or tax reductions.”

Asked about the concerns expressed by entrepreneurs and business leaders, Md Abdur Rahman Khan, chairman of the National Board of Revenue, told Bonik Barta, “The upcoming budget will be tolerable for the business community. We’re working to ensure that the budget remains business-friendly.”