DCCI seeks single-digit VAT rate to ease business costs

NBR chief says the government’s VAT reduction depends on businesses’ transparency and cooperation

The Dhaka Chamber of Commerce and Industry (DCCI) has said while the general VAT rate stands at 15 percent, reducing it to 10 percent, 7.5 percent, and 5 percent in different sectors is causing "complications" for businesses and leading to "disputes" in many areas.

The DCCI claims that businesses are burdened with additional taxes due to inconsistent VAT exemption benefits across sectors.

In this context, the organisation has proposed setting the VAT rate in single digits in the upcoming budget, along with a 1 percent VAT rate for businesses in the informal sector.

It believes this will bring "transparency" to the overall tax system, reduce operational costs, and have a "positive impact" on the production sector.

During a pre-budget discussion at the NBR conference room on Tuesday, the DCCI submitted 42 proposals for inclusion in the 2025–26 national budget.

The proposals focused on expanding the tax net and revenue collection targets, reducing tax rates, introducing a business-friendly tax policy and automation system, reforming VAT procedures, protecting local industries and the manufacturing sector, simplifying import duties and tariff structures, and making the individual tax framework more accessible.

DCCI President Taskeen Ahmed urged the National Board of Revenue (NBR) to set short, medium, and long-term targets for increasing the number of taxpayers and expanding the tax net.

He also proposed the introduction of an automated system for filing corporate tax returns online.

Considering the current inflationary pressure, the DCCI has also suggested raising the individual tax-free income threshold from Tk 350,000 to Tk 500,000.

For commercial importers, it proposed a gradual reduction of the 5 percent advance tax on imports, as well as the phased elimination of the existing advance tax for manufacturers at the import stage.

Taskeen explained that discrepancies between the tariff values set by customs authorities and market prices are forcing businesses to pay more in duties than the actual value of goods, thus increasing costs and complicating the import process.

He proposed replacing the tariff value with a fixed duty rate to alleviate these issues.

NBR Chairman Md Abdur Rahman Khan, who chaired the discussion, reaffirmed the NBR’s commitment to expanding the tax net and facilitating business and investment growth.

“We are determined to widen the tax net because it is unacceptable for some in society to pay taxes while others do not," he said.

The NBR chief continued: "The number of TIN holders has exceeded 10 million in the past decade, but the rise in taxpayers remains below expectations, which is quite disappointing.

“Like income tax, the corporate tax filing process is being fully shifted online."

He said if the business community agrees, the interim government would be willing to reduce the VAT rate to a single digit instead of maintaining different tiers.

Abdur, however, emphasised that businesses' goodwill and transparency are essential for this to happen.

He expressed interest in developing software through local IT experts to ensure transparency in the VAT system and strengthen business cooperation.

The NBR chief sought support from the business community for this initiative.