Trade associations in Bangladesh are demanding a simpler and investment-friendly tax structure that would ensure sustainable economic growth and broaden tax collection in the country.

Leaders of the Bangladesh Chamber of Industries (BCI), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Dhaka Chamber of Commerce and Industry (DCCI), and other trade bodies placed this demand at a meeting with officials of the finance ministry and the National Board of Revenue (NBR) yesterday.

Held at the finance ministry, the meeting discussed potential budgetary support for local businesses, particularly small and medium enterprises (SMEs), in the fiscal year 2025-26 amid ongoing economic challenges at home and abroad.

The participating trade bodies issued several demands, such as reducing the source tax on exports to 0.5 percent from 1 percent, as exporters are facing global competition and labour unrest.

Additionally, they proposed lowering customs duties on raw materials, machinery, and essential inputs to encourage local production and competitiveness.

They also recommended offering special tax benefits for SMEs, lowering corporate tax rates, and easing the tax return filing process to boost entrepreneurship.

They emphasised modernising VAT management, ensuring fair input tax credit, and rationalising advance income tax and advance tax rates.

Furthermore, they urged the restructuring of minimum tax calculations to prevent loss-making companies from becoming overburdened.

To address challenges following the country's graduation from the least developed country category, they proposed special incentives for labour-intensive and export-oriented sectors.

After the meeting, Finance Adviser Salehuddin Ahmed said the interim government is aiming for a business-friendly budget that will maximise investment, stimulate business activities, and drive GDP growth to its highest potential.

"We are also encouraging businesses to not only submit tax returns online but also make tax payments digitally," he added.

He informed that the participants had raised concerns over certain inconsistencies in the tax system.

"We will address these anomalies and bring necessary corrections," Ahmed said.

BCI President Anwar-ul Alam Chowdhury said the finance adviser specifically asked for their views on taxation.

"He asked us to submit our demands regarding fiscal and banking issues in writing," he added.

Chowdhury also said that the finance minister appears determined to take stricter measures to enhance revenue collection.

"We highlighted how empowering industries could strengthen our economic capacity," he added.

Chowdhury pointed out that a 1 percent advance income tax is deducted from garment export proceeds, even when companies incur losses.

"The NBR has assured us that they will review this issue," he said.

Chowdhury also stressed that VAT on SMEs should be reduced to enhance their competitiveness, particularly in rural areas.

BKMEA President Mohammad Hatem told reporters that businesses face significant hurdles in accessing incentives.

"So, we have demanded that incentives be paid directly to exporters," he said.

Asked about allegations of fraud and counterfeit claims for incentives through false documents, Hatem dismissed the claims as inaccurate.

DCCI President Taskeen Ahmed said they placed numerous demands, including expanding the tax net instead of increasing the tax burden, fully digitising the tax system, introducing online corporate tax payments, and implementing a unified single-digit VAT.

They also urged the Bangladesh Bank to offer at least a six-month moratorium and easy loan restructuring, as businesses are facing economic pressure.