Foreign Investors’ Chamber of Commerce & Industry (FICCI) has voiced strong concerns over the government’s recent increases in value-added tax (VAT) and supplementary duty (SD) without prior consultation with stakeholders. The chamber warned that these changes could negatively impact business sustainability, consumer costs, and economic stability, according to a press release.
Representing 90% of Bangladesh’s foreign direct investment (FDI) in sectors such as tobacco, telecom, energy, and finance, FICCI highlighted the potential risks of the tax hikes. It noted that the rising cost of doing business could weaken operational capacity and reduce essential tax contributions, which currently make up nearly 30% of internal revenue.
The chamber criticized the VAT increase to 15% on services like procurement, maintenance, transport, and restaurants, along with restrictions on input VAT recovery, as measures that would further strain businesses. Additionally, a 2.5% rise in retail VAT is expected to increase consumer prices, reduce demand, and potentially lower government revenue.
FICCI warned that policies implemented without stakeholder engagement could undermine investor confidence and deter future FDI. The chamber urged the government to prioritize dialogue with the business community and suggested reforms to simplify VAT mechanisms, promote digitization, and adopt sales-driven tax strategies.
FICCI reaffirmed its commitment to supporting a sustainable economy and called for collaborative policy-making to ensure fiscal responsibility while safeguarding Bangladesh’s investment appeal.
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