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Prospective tax is being introduced in this year’s budget

BTJ Desk Report
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Prospective tax is being introduced in this year’s budget

For the first time, Bangladeshi government plans to announce prospective tax rates for at least two fiscal years in the upcoming budget, aiming to attract foreign direct investment (FDI). High-net-worth individuals will face a tax increase from 25% to 30% to reduce income inequality, fund public services, and ensure a fairer distribution of resources. This shift to a “predictable tax regime” is expected to boost FDI, as foreign investors’ value tax predictability. Local individuals and companies will also benefit from the ability to plan their finances more effectively.

Currently, Bangladesh follows a “retrospective tax regime,” creating uncertainty about tax rates. Mr. Snehasish Barua, a partner at Snehasish Mahmud and Co, has long advocated for a prospective tax structure, highlighting its benefits for tax and investment planning.

The new budget also proposes changes to corporate tax rates, including a 2.5% tax cut for companies adopting cashless operations to promote a cashless society. This adjustment aims to equalize tax rates for noncompliant listed firms and compliant non-listed firms, though business leaders argue for a wider tax gap to incentivize companies to go public.

Additionally, the NBR will introduce expiration timelines for Statutory Regulatory Orders (SROs) on import duties. Concessional duty facilities for importing paper and raw materials for computer and lift manufacturing will expire on June 30, 2027, while those for prefabricated building materials, refrigerators, washing machines, LPG cylinders, auto tanks, valves, and coal for electricity generation will expire on June 30, 2026.

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