The American Chamber of Commerce in Bangladesh (AmCham) has presented a bold set of budget recommendations to the National Board of Revenue (NBR), urging urgent reforms to modernise the country’s tax system and create a more competitive environment for businesses.
AmCham’s key proposal involves simplifying the Double Taxation Avoidance Agreement (DTAA) certification process, reducing the processing time to seven days and extending its validity to three years.
The move, according to the chamber, will streamline operations and make Bangladesh a more attractive destination for global businesses.
Another major recommendation calls for aligning foreign currency conversion with international standards. AmCham suggests adopting the annual average selling rate published by Bangladesh Bank to simplify financial transactions and reduce complexity in international trade.
AmCham also highlighted the need to harmonise corporate tax rates for both foreign and local commercial banks, recommending a uniform tax rate of 37.5 per cent.
The chamber further proposed preferential tax rates for offshore banking units, suggesting a range of 0–20 per cent to align with other Asia-Pacific countries and attract greater foreign direct investment (FDI).
In the beverage sector, AmCham pushed for a reduction in the supplementary duty from 30 per cent to 15 per cent, aiming to lower production costs and make carbonated beverages more affordable for consumers. This reform, the chamber argues, would stimulate growth in the sector and help stabilise the economy.
The current tax burden on carbonated and sweetened beverages in Bangladesh is the highest in the region, amounting to a total of 54 per cent, which includes 15 per cent VAT, 30 per cent supplementary duty, and import duties.
The rate is much higher than in neighbouring countries. For example, India has a tax burden of 40 per cent, Sri Lanka has 29.2 per cent, Nepal has 38.43 per cent, and Bhutan has 30 per cent.
The chamber also called for digital financial inclusion, proposing to reduce duties on smart cards and POS machines and introduce cash incentives for digital transactions. These changes, AmCham believes, would promote a cashless economy and support financial inclusion goals.
For the manufacturing sector, AmCham recommended a VAT exemption on recycled cotton (Jhoot), which would save up to $500 million annually by reducing reliance on imported cotton. This measure would strengthen the local textile industry and align with sustainable development goals.
On foreign portfolio investment, AmCham urged the government to lower tax rates for non-resident institutional investors in government securities and to digitise government securities transactions. These reforms would enhance market liquidity and attract foreign capital.
In the tobacco sector, AmCham proposed shifting from the ad-valorem tax system to a specific tax system, imposing a fixed tax per pack rather than a percentage-based tax. This change would reduce tax evasion and create a more realistic tax system, ultimately boosting revenue.
The current total tax load on tobacco products in Bangladesh is between 83–85 per cent, significantly higher than realistic thresholds and contributing to widespread tax evasion.
AmCham’s proposals aim to create a predictable and transparent tax system that fosters a competitive and growth-oriented economic environment. These reforms, if implemented, could significantly improve Bangladesh’s business climate, attract greater foreign direct investment, and contribute to long-term economic prosperity.
With these reforms, Bangladesh’s tax system could evolve from one focused on compliance to one rooted in confidence, positioning the country as a more attractive destination for global investment and driving sustainable economic growth.
The budget recommendations were formally presented by Philip Morris Bangladesh Country Manager Reza-Ur-Rahman Mahmud, AmCham President Syed Ershad Ahmed, and other prominent members including Recover Global CFO Fehmi Muhsin Yüksel, Coca-Cola Bangladesh Beverages General Manager & Managing Director Shadab Ahmed Khan, HSBC CEO Md Mahbub Ur Rahman, Mastercard Country Manager Syed Mohammad Kamal, and senior officials from Citibank N.A. and MetLife, who participated in the event.
