Supermarket operators in Bangladesh have demanded that the government cut the minimum turnover tax to 0.25 per cent, arguing that the current rate is squeezing margins and slowing the formalisation of the retail sector.
Industry representatives and experts said modern retail businesses are facing pressure after the government raised the minimum turnover tax to 1 per cent from 0.6 per cent at the beginning of the current fiscal year.
The issue was discussed at a roundtable titled “Modern Retail Growth in Bangladesh: Challenges, Solutions, and the Way Forward”, organised by Bangladesh Supermarket Owners Association (BSOA) with support from SMAC Advisory Services Limited at a city hotel on Monday.
Participants said the higher tax rate is particularly challenging for superstores because the business operates on thin margins.
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) in the supermarket sector typically ranges between 1 and 3 per cent.
At that level, a 1 per cent turnover tax could consume nearly 68 per cent of EBITDA, leaving little room for reinvestment and potentially limiting growth in the sector.
Industry representatives said a turnover tax of 0.25 per cent would be more sustainable because it preserves cash needed for supplier payments and reflects international practices that adjust turnover-based taxes for low-margin industries.
Stakeholders warned that excessive fiscal pressure could discourage the formalisation of the retail sector even though supermarkets contribute substantial revenue to the government.
SMAC Advisory Services Limited Managing Director Snehasish Barua said modern supermarkets operate under much stricter regulatory compliance than traditional markets.
“VAT registration is mandatory for supermarkets, but many local market retailers do not have it,” he said.
“Supermarkets are required to file income tax returns, while compliance in traditional markets is often inconsistent.”
Superstores maintain full records through point-of-sale and electronic cash register systems, while most local market transactions remain cash-based, he said.
“Supermarkets must also maintain audited accounts and documented supply chains, while the supply chain in traditional markets is often opaque,” he added.
“Despite this difference in transparency, the minimum tax applies to supermarkets but remains difficult to enforce in local markets.”
Speakers said Bangladesh’s consumer market remains largely informal even though supermarkets are leading the shift toward a more formal retail system.
Supermarket penetration remains low across South Asia because traditional retail dominates the market.
Modern retail accounts for about 10 to 15 per cent of the retail market in India and only around 3 per cent in Bangladesh.
The share is significantly higher in East Asia and Europe.
Modern retail accounts for around 60 per cent of the market in Japan, about 55 per cent in South Korea and roughly 50 per cent in China.
In Europe, the United Kingdom, Spain and France record modern retail penetration between 60 and 70 per cent.
Participants said modern retail also plays a role in maintaining food safety through cold chain systems that reduce waste and help ensure chemical-free produce.
Supermarkets have become one of the most trusted spaces for daily shopping, particularly for women, allowing consumers to buy a wide range of products quickly and conveniently under one roof.
Speakers said the growth of modern retail supports several Sustainable Development Goals, including good health and well-being, responsible consumption and production and gender equality.
The roundtable concluded with a call for closer collaboration between the government and private sector to ensure retail policies foster sustainable growth, protect consumer safety and strengthen Bangladesh’s long-term economic stability.
National Board of Revenue Member Tax Policy Barrister Mutasim Billash Faruqui, Brummer & Partners Bangladesh Limited Chief Executive Officer Muallem Ahmed Choudhury, and Unilever Consumer Care Ltd Chairman Masud Khan attended the session.
Institute of Cost and Management Accountants President Md Kausar Alam, Economic Reporters Forum President Doulot Aktar Mala, and National Board of Revenue Former Member Tax Policy Apurba Kanti Das were also present.
Dhaka University Professor and economist M Abu Eusuf and Bangladesh Supermarket Owners Association General Secretary Md Zakir Hosain also attended the discussion.
