B Mirror Report: The International Monetary Fund (IMF) has advised Bangladesh to withdraw all forms of tax exemptions, including income tax, value-added tax (VAT), and customs duties, starting from the upcoming national budget for FY2026–27.

Alongside the removal of exemptions, the IMF has also called for a reduction in supplementary duties imposed at the import stage, according to sources at the National Board of Revenue (NBR).

The recommendations were discussed during the Annual and Spring Meetings of the IMF and World Bank Group held in Washington, DC. A senior NBR official said the IMF has taken a firm position on withdrawing all tax-related concessions.

Another official involved in the discussions said the lender is also pushing for the rationalisation of tariffs and the removal of energy subsidies on gas and electricity, while expanding social safety net support for low-income groups.

Bangladesh has sought around $1.53 billion in budget support, including overdue instalments under its existing IMF programme and fresh financing. However, the size and conditions of new disbursements are yet to be finalised.

The IMF has also reiterated its demand for a fully market-based exchange rate, while Bangladesh Bank officials said the country plans a gradual transition to a market-driven system to maintain stability.

Currently, Bangladesh offers extensive tax exemptions across multiple sectors, including agriculture, education, healthcare, energy, export industries, and remittances. According to NBR data, total tax expenditure in FY2022–23 stood at around Tk2.66 lakh crore, compared to total revenue collection of Tk3.25 lakh crore.

Economists say while reform is necessary, a sudden withdrawal of exemptions could increase inflationary pressure, reduce investment competitiveness, and disrupt key sectors such as exports and manufacturing.

Policy experts have urged a phased and structured approach, recommending sunset clauses, periodic reviews, and targeted incentives instead of blanket exemptions.

They also cautioned that abrupt policy shifts could undermine investor confidence and destabilise economic activities, calling for a balanced transition aligned with Bangladesh’s long-term fiscal reform goals.