Small and medium-sized enterprises across Bangladesh could soon receive significant fiscal relief as the National Board of Revenue moves to exempt businesses with an annual turnover of up to two crore taka from minimum turnover taxes. Under the proposed framework, enterprises falling below this financial threshold will be completely free from the mandatory levy, decoupling their tax liabilities from profit and loss fluctuations.
The initiative introduces a tiered tax structure designed to ease compliance pressures on smaller commercial entities. Businesses recording a turnover between two and three crore taka will face a reduced minimum tax rate of 0.25 per cent, while those operating between three and four crore taka will be subject to a 0.50 per cent rate. Enterprises exceeding the four-crore-taka threshold will maintain the existing minimum turnover tax of 1 per cent.
An official summary of the proposal has already secured approval from the finance minister and has been forwarded to the Ministry of Law for legal vetting. Formal promulgation of these adjustments is anticipated shortly once the regulatory review concludes.
The reform addresses a long-standing grievance among local business communities regarding the rigidity of turnover-based taxation. Under current rules, firms must pay a flat percentage of their total sales regardless of net profitability or net loss. Business leaders and trade associations have noted that when operating overheads, raw material expenses, and credit costs rise, a rigid levy based entirely on gross sales places a heavy burden on cash flow.
Industry figures have responded to the upcoming policy changes with mixed perspectives. Hasanul Islam Tupu, president of the VAT Consultants Association of Bangladesh, welcomed the move as a timely safeguard for small entrepreneurs navigating a challenging economic environment. Conversely, FBCCI administrator Md. Fazlul Haque argued that taxation should strictly reflect corporate earnings, reiterating a preference for the total abolition of minimum turnover taxes in favour of net-profit-based models. Dhaka Chamber president Taskin Ahmed echoed similar sentiments regarding the need to move away from rigid turnover levies. At the same time, chartered accountant Snehasish Barua noted that while the sliding scale offers welcome relief for smaller firms, larger enterprises operating on narrow profit margins or facing net losses may still find the adjustments insufficient.
Tax administrators and industry analysts have also highlighted potential compliance risks, warning that the two-crore-taka exemption threshold might inadvertently incentivise some commercial operators to underreport gross sales to remain beneath the tax-free ceiling. Effective monitoring and transparent accounting mechanisms will remain vital to prevent tax avoidance.
Current fiscal friction stems largely from rigid calculation rules. Industry calculations illustrate the heavy burden placed on low-margin operators under flat rates. For instance, a firm recording fifty lakh taka in sales with a 5 per cent net profit yields an income of two lakh fifty thousand taka, yet faced a fifty-thousand-taka minimum tax liability under the flat system. Similarly, a business generating one crore taka in sales with five lakh taka in profit faced a turnover tax of one lakh taka, vastly exceeding standard corporate income expectations. The proposed adjustments aim to alleviate this pressure for the smallest market participants once finalised and enacted.
