The European Union Chamber of Commerce in Bangladesh (EuroCham) has submitted a series of budget proposals to the National Board of Revenue (NBR), calling for urgent reforms to modernise the tax system and enhance the country’s business competitiveness.
EuroCham Chairperson Nuria Lopez expressed concern about trade preferences Bangladesh is offering to certain partners, which she believes could create an uneven playing field for European businesses.
While she did not specify the countries or types of preferences, her statement highlighted growing concerns among European firms operating in Bangladesh.
One of EuroCham’s key proposals is to reduce the Advance Income Tax (AIT) on imported raw materials from 5 per cent to 2 per cent. The reduction aims to alleviate a critical liquidity bottleneck in the manufacturing sector.
High AIT rates, combined with supply-stage taxes, often result in taxes exceeding the actual liability of companies, causing vital working capital to be trapped in a slow and cumbersome refund process.
EuroCham argued that reducing this upfront burden would help reduce the dependency on high-interest bank loans to cover operational costs.
EuroCham also highlighted the importance of pursuing a free trade agreement (FTA) with the European Union to strengthen bilateral trade and further boost economic ties between Bangladesh and the EU.
Additionally, the chamber is advocating for a more equitable legal framework by proposing a reduction in mandatory deposits for tax appeals, from the current 10-25 per cent to 5-10 per cent.
In line with the country’s climate goals, EuroCham suggested a 0 per cent VAT rate on solar inverters and related rooftop equipment.
The chamber argued that the current 15 per cent VAT is a significant deterrent to renewable energy investments, making it financially unviable for many business models.
Through these proposals, EuroCham aims to foster a more favourable business environment that encourages growth and investment while aligning with both economic and environmental goals.
