The Foreign Investors' Chamber of Commerce & Industry (FICCI) has expressed serious concerns over the government's recent hike in value-added tax (VAT) and supplementary duty (SD) without prior consultation with stakeholders, warning of potential adverse effects on business sustainability, consumer costs, and overall economic stability.

The FICCI, which represents 90 percent of Bangladesh's total foreign direct investment (FDI) across key sectors like tobacco, telecom, energy, and finance, highlighted the risks of these tax revisions, according to a press release.

The chamber said the increased costs of doing business could weaken operational capacity and reduce crucial tax contributions, which currently account for nearly 30 percent of internal revenue.

The VAT increase to 15 percent for services such as procurement, maintenance, transport, and restaurants—paired with restrictions on input VAT recovery—will further burden businesses.

Also, a 2.5 percent hike in retail VAT is likely to raise consumer prices and dampen demand, ultimately reducing government revenue, FICCI warned.

The chamber also said that policies devised without stakeholder engagement could deter future FDI by eroding investor confidence in Bangladesh's business environment.

The FICCI urged the government to prioritise dialogue with the business community and suggested reforms to simplify VAT mechanisms, encourage digitisation, and enhance sales-driven tax strategies.

Reaffirming its commitment to fostering a sustainable economy, the FICCI called for collaborative policy-making to ensure fiscal responsibility while maintaining Bangladesh's investment appeal.