RMG tax breaks may be phased out: NBR chief

The current reduced corporate tax rates of 10 to 12 percent for the ready-made garment (RMG) sector may not last much longer, said National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan.

Speaking at a pre-budget meeting with stakeholders at the NBR headquarters in Agargaon yesterday, Khan signalled a gradual return to the standard corporate tax rate of about 27.5 percent.

Export-oriented knitwear and woven garment manufacturers, along with green-certified factories, currently enjoy lower corporate tax rates of 10 percent and 12 percent, respectively. These incentives are designed to boost exports and encourage sustainable industrial practices.

However, Khan said these incentives are temporary and could be removed as part of wider tax reforms to ensure fairness.

“Such reduced rates won’t last long,” he said during a discussion at the meeting with the Women Entrepreneurs Network for Development Association (WEND) on corporate tax incentives for women-led businesses.

He added that exporters already enjoy a 50 percent income tax exemption on export earnings, which greatly lowers their actual tax burden. For example, with the standard corporate tax rate at 27.5 percent, the exemption reduces the effective rate to about 12 percent.

Nadia Binte Amin, president of WEND, suggested equalising corporate tax rates and reducing the 1 percent tax deducted at source (TDS) on export earnings for fully women-owned businesses.

She also proposed a 10 percent tax rebate for companies investing in research and development, innovation, training, and sustainable development.

AMCHAM PROPOSALS AHEAD OF BUDGET

The American Chamber of Commerce in Bangladesh (AmCham) shared its budget recommendations at the meeting. They proposed rationalising the current 1 percent minimum tax on annual turnover.

Khan responded that there is pressure to increase, not reduce, the minimum tax.

AmCham also suggested maintaining a level playing field in the banking sector by applying a uniform 37.5 percent tax rate to both foreign and local commercial banks.

Additionally, they recommended lower tax rates for Offshore Banking Units (OBUs), similar to other Asia-Pacific countries, where rates range from 0 to 20 percent.

“These measures would attract more foreign direct investment, improve exporters’ competitiveness, and increase overall investment and revenue,” said AmCham President Syed Ershad Ahmed.

Other proposals included reducing the supplementary duty on carbonated and sweetened beverages from 30 percent to 15 percent, simplifying procedures under Double Taxation Avoidance Agreements (DTAA), speeding up certification processes, introducing a standard foreign currency conversion method in line with international practices, and rationalising withholding tax rates.

AmCham also highlighted the need to promote digital financial inclusion and support sustainable industries. Their recommendations included lowering duties on smart cards and POS machines, offering incentives for digital payments, rationalising minimum tax rates, and creating a fully digital, time-bound tax refund system.

The meeting was attended by representatives from several business chambers, including EuroCham Bangladesh, Bangladesh-China Chamber of Commerce and Industries, and India-Bangladesh Chamber of Commerce and Industry, who shared their proposals ahead of the 2026-27 fiscal year budget.