The Japan-Bangladesh Chamber of Commerce and Industry (JBCCI) has submitted a comprehensive set of recommendations for the National Budget FY 2026–27, focusing on improving the investment climate, enhancing industrial competitiveness, and supporting sustainable economic growth.

At a pre-budget press conference, JBCCI said Bangladesh is currently at a critical economic transition phase amid global uncertainty, inflationary pressures, rising financing costs, and preparations for post-LDC graduation. In this context, the chamber urged the government to prioritize growth, investment, and fiscal modernization in the upcoming budget.

Corporate Tax Reduction Proposed

JBCCI recommended reducing the corporate tax rate for the private sector from 25 percent to 20 percent to attract both domestic and foreign investment. It noted that many countries are lowering corporate tax rates to encourage foreign direct investment, while Bangladesh’s comparatively higher rate is discouraging industrial expansion.

TDS and Withholding Tax Reforms

The chamber also proposed a reduction in Tax Deducted at Source (TDS) rates on suppliers, subcontractors, service providers, rental payments, and foreign service providers.

It said excessive withholding taxes are creating cash flow pressure and increasing the cost of doing business, and recommended shifting the focus of taxation toward net profit-based systems.

JBCCI further called for reduced withholding taxes on foreign technical and professional services to promote technology transfer and attract investment.

Minimum Tax and Refund System Changes

The chamber suggested withdrawing minimum tax obligations for loss-making businesses, saying the current system places additional burdens on companies already operating at a loss.

It also emphasized the need for a fast, automated, and time-bound tax refund system to ease liquidity pressure and improve compliance.

VAT Simplification Proposed

JBCCI proposed reducing the standard VAT rate from 15 percent to 7.5 percent and introducing a simplified unified VAT structure. It said the current multi-tier system creates complexity, disputes, and higher compliance costs.

Customs Duty Reduction

The chamber recommended lowering customs duty, regulatory duty, VAT, advance tax, and advance income tax on raw materials, industrial inputs, and key sectors such as renewable energy, healthcare, automobiles, steel, cement, and manufacturing.

It said high import duties are increasing production costs and weakening export competitiveness.

Sector-Specific Support

JBCCI also called for targeted fiscal incentives for key sectors, including ready-made garments, textiles, IT and IT-enabled services, pharmaceuticals, construction, agriculture, and healthcare.

Recommendations include reduced source tax on exports, VAT exemptions on raw materials and machinery, tax holidays for strategic industries, and incentives for green and sustainable investments.

Focus on Fiscal Modernization

The chamber stressed the need to expand the tax base, promote economic formalization, and accelerate digital transformation of the tax system to ensure long-term revenue growth and improved compliance.