Business bodies welcome budget, flag risks

The Foreign Investors’ Chamber of Commerce and Industry (FICCI), the Dhaka Chamber of Commerce and Industry (DCCI), the Institute of Chartered Accountants of Bangladesh (ICAB), the Chittagong Chamber of Commerce and Industry (CCCI), and the American Chamber of Commerce in Bangladesh (AmCham) have welcomed several measures in the proposed national budget for the 2026-27 fiscal year unveiled today.

However, the private-sector bodies also raised concerns, according to statements and press releases issued by the organisations.

FICCI welcomed a range of tax, VAT and customs reforms proposed in the Finance Bill 2026, saying they would ease compliance and improve the business climate.

DCCI described the budget as business- and investment-friendly but said its success would depend on meeting ambitious revenue targets and effectively implementing the proposed reforms.

ICAB called the budget broadly business-friendly but warned that heavy reliance on bank borrowing could hurt private-sector investment. It also said some new tax measures may fuel inflationary pressures.

CCCI welcomed the proposal to reduce advance income tax (AIT) on imports. AmCham applauded the budget as a balanced effort to stabilise the economy but cautioned against heavy domestic borrowing.

FICCI welcomes tax reforms

FICCI welcomed several tax, VAT and customs reforms in the Finance Bill 2026, saying measures such as treating tax deducted at source as advance tax, introducing automated refunds and shifting VAT return filing to a quarterly basis would reduce compliance costs and improve cash flow.

It also praised lower withholding taxes on raw material imports, foreign loan interest and machinery rentals, along with steps to simplify profit repatriation.

However, the chamber urged the government to review the proposed 0.2 percent advance tax at the retail level, allow a transition period for mandatory e-VAT and restore investment rebate benefits.

It also cautioned that achieving the Tk 6.95 lakh crore revenue target would be challenging.

DCCI stresses implementation

DCCI said the proposed Tk 9.38 lakh crore budget reflects the government's growth ambitions but warned that the targeted 30.34 percent rise in revenue collection would be difficult to achieve under current economic conditions.

The chamber cautioned that excessive borrowing to finance the budget deficit could hamper the banking sector’s recovery and crowd out private investment. While welcoming the proposed Tk 3 lakh crore Annual Development Programme (ADP), it noted that the current fiscal year’s implementation rate of just 36.19 percent points to persistent execution weaknesses.

DCCI praised the decision to treat withholding tax as advance tax, lower withholding tax on industrial raw materials and provide incentives for healthcare, renewable energy and electric vehicles. It also welcomed efforts to broaden the tax base without raising VAT rates.

However, the chamber expressed disappointment that the tax-free income threshold was left unchanged despite inflation and urged the government to raise it to Tk 5 lakh.

It also welcomed turnover tax exemptions for CMSMEs, e-loans of up to Tk 50,000, and tax cuts on electric vehicles, electronics and technology products. Measures such as mandatory single-window services, faster processing of work permits and investor visas, and lower taxes on foreign loans would improve the investment climate, it said.

DCCI also called for stronger support for gas exploration and a long-term energy pricing framework developed in consultation with stakeholders.

ICAB raises concerns over bank borrowing

ICAB said the Tk 9.38 lakh crore budget reflects the government's effort to sustain growth amid global uncertainty, high inflation and geopolitical tensions, but voiced concern over plans to finance Tk 1.12 lakh crore of the deficit through bank borrowing, warning that it could squeeze credit to businesses and slow investment.

The institute also cautioned that the proposed 0.2 percent tax on retail businesses and a 0.5 percent tax on many agricultural products may add to inflationary pressures. It stressed the need to widen the tax net to improve Bangladesh’s tax-to-GDP ratio.

ICAB welcomed several tax, VAT and customs reforms, including fixed tax rates for five years, removal of minimum tax provisions, start-up incentives, lower appeal deposits and measures to reduce disputes. It also said the DVS and the ongoing digitalisation of corporate tax returns would strengthen compliance and revenue collection.

However, it urged a review of several proposals, including advance tax collection from retailers, higher turnover-based minimum taxes and additional taxes on low-dividend listed companies.

CCCI believes AIT cut will ease business costs

Mohammed Amirul Haque, president of CCCI, welcomed the proposal to reduce advance income tax (AIT) on imports to 4 percent from 5 percent, saying it would ease cost pressures on businesses and improve cash flow for importers and manufacturers.

The lower rate would reduce capital tied up at the import stage, allowing firms to allocate more funds to production, expansion and working capital, he said. The measure would particularly benefit industries dependent on imported raw materials, intermediate goods and capital machinery.

Haque also welcomed tax cuts on foreign loan interest and machinery lease payments, as well as incentives for renewable energy, electric vehicles, semiconductors and electronics manufacturing, saying these could attract fresh investment.

He further praised plans to establish Free Trade Zones and liberalise foreign investment in private off-docks and inland container depots, which could strengthen logistics and trade efficiency.

Tax benefits for start-ups, SMEs, freelancers and content creators, alongside accelerated depreciation facilities outside Dhaka and Chattogram, would support entrepreneurship and regional development, he added.

AmCham cautions against heavy borrowing

Welcoming the budget, AmCham described it as a balanced effort to stabilise the economy while supporting growth and social welfare.

The chamber said the projected fiscal deficit of 3.55 percent of GDP is manageable but cautioned that heavy domestic borrowing could limit private-sector credit. It stressed the need for tax administration reforms, greater digitalisation and improved transparency to broaden the tax base.

It praised increased allocations for education, healthcare and social protection while calling for better service delivery and project implementation. It also welcomed measures to boost exports, facilitate trade and promote renewable energy, stressing the importance of policy consistency and effective implementation.