The government has proposed sweeping tax and duty exemptions for startups, freelancers and technology products in the FY2026-27 budget, positioning the incentives as part of a broader push to support digital entrepreneurship and technology adoption.
Startup relief, device duty cuts
Among the key measures announced are the extension of VAT exemptions for startups until 2035, removal of VAT on services provided by freelancers and content creators, abolition of the Tk 300 tax on SIM cards, and withdrawal of import duties and VAT on laptops, desktops, servers, printers and monitors.
The budget also proposes the creation of a Tk500 crore startup fund aimed at supporting young and women entrepreneurs.
Despite the incentives, the proposed allocation for the science and information technology sector stands at Tk20,164 crore, slightly lower than the revised allocation of Tk20,658 crore in the current fiscal year, although significantly higher than the original allocation of Tk15,013 crore.
Of the proposed allocation, Tk18,115 crore has been earmarked for the Ministry of Science and Technology, while the Information and Communication Technology (ICT) Division is set to receive Tk2,049 crore, down from Tk2,866 crore in the revised budget.
‘Execution matters more than incentives’
Industry stakeholders welcomed the tax relief measures but said the effectiveness of the budget would depend on implementation and investment priorities.
Under the proposals, startup companies will continue to enjoy VAT exemptions on local services, imported services and office rent until 2035.
The government has also proposed reducing the minimum turnover tax rate for new IT startups to 0.1 per cent, while maintaining tax exemptions on remittance income earned by freelancers.
The budget further proposes removing the 15 per cent VAT imposed on services provided by freelancers and content creators, a long-standing demand of the sector.
For technology products, all import duties, regulatory duties, supplementary duties and VAT on computers and related equipment are proposed to be withdrawn.
In the case of solid-state drives (SSDs), only a 5 percent import duty will remain.
The government says the withdrawal of the Tk 300 SIM tax is intended to promote digital inclusion, although the measure is expected to reduce revenue by around Tk 1,200 crore in the next fiscal year.
Spending trends show gap between allocation and execution
Fahim Mashroor, chief executive officer of Bdjobs, said the budget’s success would depend less on the size of allocations and more on how effectively resources are used.
“What matters is whether spending is directed to the right areas,” he said, noting that actual expenditure in the sector has often fallen short of budgeted allocations.
According to budget documents, actual spending in the science and ICT sector during FY2024-25 was Tk10,630 crore, nearly half the size of the proposed allocation for the coming fiscal year.
Mashroor also questioned whether the removal of the SIM tax would significantly improve digital inclusion, arguing that internet affordability remains a bigger challenge.
“Most people already have access to SIM cards. The larger issue is the cost of internet usage,” he said.
AI and R&D plans remain largely undefined
The proposed budget also includes references to artificial intelligence, semiconductor development and AI-powered public services.
The government says it plans to encourage AI-driven entrepreneurship among young people and explore the use of AI in public administration and service delivery.
However, no dedicated funding allocation or detailed implementation framework for those initiatives has been announced.
Former BASIS Senior Vice-President Mostafizur Rahman Sohel said the focus should now shift from infrastructure spending to innovation and research.
“Budget allocations often increase, but a large share goes to infrastructure. Greater attention is needed for software development, innovation and research,” he said.
Digital economy ambitions face structural gaps
Industry representatives say the absence of specific commitments on research and development remains a major weakness.
They also note that while the budget provides tax incentives for devices and businesses, it does not address the high cost of internet access, which many consider one of the biggest barriers to expanding the country’s digital economy.
Bangladesh Computer Samity President Md Zahirul Islam welcomed the duty exemptions on computers but stressed the need to improve access and digital skills.
“Lower prices will help, but creating a skilled workforce is equally important. Many people still do not have access to computers, while the rest of the world is rapidly moving towards artificial intelligence,” he said.
Outlook: Incentives strong, roadmap unclear
The budget measures broadly align with the government’s stated goal of promoting technology-led growth and entrepreneurship.
However, analysts say the sector’s long-term success will depend on whether tax incentives are accompanied by greater investment in research, skills development and affordable internet access.
While startups, freelancers and technology importers appear to be the immediate winners of the proposed budget, questions remain over how quickly broader ambitions such as AI development, semiconductor capabilities and a more competitive digital economy can be translated into reality.
