The Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka, has urged the government to undertake comprehensive reforms of the country’s business tax framework, proposing a significant reduction in the turnover tax on gross receipts from 1 per cent to 0.3 per cent. The chamber argues that the existing taxation system places an excessive burden on businesses and creates structural imbalances within the overall fiscal regime.
According to MCCI, the current arrangement involving tax deduction at source, turnover-based taxation, and final tax liability often overlaps, generating administrative complexity for enterprises. This not only increases compliance costs but also places strain on corporate cash flows. The organisation further cautioned that multiple layers of taxation on the same income stream risk undermining efficiency and transparency in the system.
These proposals were presented during pre-budget consultations ahead of the fiscal year 2026–27. MCCI emphasised that aligning tax rates with prevailing business realities is essential to improving investment conditions and supporting economic resilience.
Proposed Tax Adjustments
| Sector / Area | Current Rate | Proposed Rate | Intended Objective |
|---|---|---|---|
| Turnover tax | 1% | 0.3% | Reduce business burden |
| Export sector withholding tax | Variable | 0.50% | Enhance competitiveness |
| Import-stage withholding tax | 5% | 3% | Lower production costs |
| Domestic transactions | 1% | 1–3% (flexible) | Risk-based taxation system |
| Packaging materials | Unspecified | 3% | Ensure tax transparency |
The chamber also recommended reducing withholding tax on exports to 0.50 per cent to help maintain competitiveness amid global trade uncertainties. It noted that advance tax deductions are restricting exporters’ working capital, thereby constraining production capacity and limiting opportunities for market expansion.
In addition, MCCI proposed lowering import-stage withholding tax from 5 per cent to 3 per cent. This measure, it argued, would reduce the cost of raw materials and capital machinery, thereby encouraging industrial production and stimulating new investment.
For domestic transactions, the organisation suggested a flexible withholding tax structure ranging between 1 per cent and 3 per cent, depending on product type and associated risk factors. It also recommended introducing a fixed 3 per cent rate for packaging materials to establish a clearer and more predictable taxation framework.
To further ease liquidity pressures on businesses, MCCI advocated the issuance of a “no withholding tax” certificate mechanism, which would help simplify refund procedures and reduce delays in tax adjustments.
MCCI President Kamran T. Rahman highlighted that businesses are currently facing significant challenges due to high inflation, rising interest rates, and continued pressure in the foreign exchange market. He noted that small and medium-sized enterprises are particularly vulnerable under these conditions.
He further stressed the importance of a supportive budgetary framework aimed at reducing operational costs, encouraging private sector investment, and restoring business confidence. According to him, coordinated policy reforms are essential to stabilise the economy and ensure sustainable long-term growth.
Economists and business observers believe that the chamber’s proposals could play an influential role in shaping upcoming budget discussions, particularly in relation to improving the ease of doing business and modernising the tax system.