The Dhaka Metropolitan Chamber of Commerce and Industry has urged the government to undertake a comprehensive review of the country’s existing tax framework, proposing a series of significant reforms aimed at easing pressure on businesses and improving the overall investment climate.
In its proposals, the chamber argues that the current taxation system has become overly burdensome, creating administrative complications and, in some cases, resulting in multiple layers of taxation on the same income. According to the organisation, such inefficiencies are distorting normal business operations and discouraging both domestic and foreign investment.
A central recommendation is the reduction of turnover tax on gross receipts from 1 per cent to 0.3 per cent. The chamber maintains that the existing rate is particularly restrictive for micro, small and medium-sized enterprises, which are already struggling with tight cash flows and rising operational costs.
In the export sector, it has suggested fixing the withholding tax rate at 0.5 per cent to enhance global competitiveness. The chamber notes that advance tax deductions are currently eroding working capital, limiting exporters’ ability to expand production and respond to international demand.
For imports, it has proposed lowering the withholding tax from 5 per cent to 3 per cent, a move it believes would reduce the cost of raw materials and capital machinery, thereby supporting industrial growth. In domestic transactions, the chamber has recommended a more flexible tax range of 1 to 3 per cent, depending on product categories and associated risk levels. It has also proposed a flat 3 per cent rate on packaging materials to bring clarity and consistency to the system.
Additionally, the organisation has called for simplification of refund-related procedures by introducing a “no withholding tax” certification mechanism, which it argues would significantly improve cash flow management and reduce procedural delays for businesses.
The chamber’s president, Kamran T. Rahman, highlighted the difficult macroeconomic environment, noting that high inflation, rising interest rates and pressure on foreign exchange reserves have already placed considerable strain on the private sector. He emphasised that small and medium-sized enterprises are bearing the brunt of these challenges and require immediate policy support.
He further stated that a simplified and more rational tax structure would encourage investment, stimulate job creation and strengthen overall economic growth.
Proposed Tax Reform Summary
| Sector / Area | Current Rate | Proposed Rate | Intended Objective |
|---|---|---|---|
| Turnover Tax | 1% | 0.3% | Reduce business pressure |
| Export Sector | Variable | 0.5% | Improve competitiveness |
| Import Sector | 5% | 3% | Lower production costs |
| Domestic Transactions | 1% | 1%–3% | Risk-based flexible taxation |
| Packaging Materials | Not clearly defined | 3% | Establish structured framework |
Economic analysts suggest that if these reforms are implemented, they could significantly simplify compliance procedures, improve liquidity for businesses, and enhance investor confidence. Over the longer term, such changes may also contribute to more stable and sustained economic growth.