STAR BUSINESS REPORT

The corporate tax rate for the private sector should be reduced to remain competitive in attracting foreign investors and supporting industrial growth, business leaders said yesterday.

“Bangladesh should reduce the corporate tax rate to 20 percent from 25 percent to remain competitive with regional economies such as Vietnam, India, and Indonesia, which attract investment through favourable tax policies,” said Tarek Rafi Bhuiyan Jun, president of the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI).

He made the remarks at a press conference organised by the chamber at Ascott The Residence in Baridhara, Dhaka, yesterday.

Lower corporate tax would spur industrial expansion, create jobs, and boost long-term revenue through increased economic activity, he said.

The trade body urged the government to restore the 15 percent corporate tax rate for the textile sector, which was raised to 25 percent in FY2025-26, saying the higher rate could hurt export competitiveness and business sustainability.

“The opportunity lies in expanding the tax base and modernising the revenue administration, rather than just increasing the burden on existing compliant taxpayers,” Bhuiyan said.

Simplifying VAT procedures and rationalising tax deducted at source (TDS) rates would improve compliance and ease cash-flow constraints on small and medium-sized enterprises, he added.

Maria Howlader, secretary general of JBCCI, stressed the need for a more predictable and investment-friendly tax regime.

Highlighting the chamber’s direct tax proposals, Howlader said the recommendations focused on corporate tax rationalisation, reforms to TDS, adjustment of advance tax provisions, minimum tax rationalisation, and faster tax refunds.

She also called for relaxing some conditions tied to the 20 percent tax rate for listed companies, saying the existing requirement of maintaining at least 10 percent public shareholding through IPOs and specific banking transaction conditions was impractical.

“Bangladesh has made notable progress, but structural bottlenecks continue to increase the cost and time of doing business, directly affecting trade flows, foreign investment and supply chain reliability,” said Asif A Chowdhury, former president of JBCCI.

According to him, logistics costs in Bangladesh account for around 12 percent to 15 percent of GDP, compared to 8 percent to 10 percent in competing economies.

Focusing on maritime connectivity, Chowdhury said Chittagong Port Authority should introduce 24-hour operations, including nighttime vessel navigation, to reduce congestion and overall costs.

“Targeted reforms in logistics and trade facilitation can significantly reduce the cost of doing business, improve reliability and position Bangladesh as a more attractive destination for foreign trade and investment,” he said.

Manabu Sugawara, former president of JBCCI, expressed optimism over the upcoming national budget, saying the country now has an opportunity to strengthen investor confidence following the signing of the Japan-Bangladesh Economic Partnership Agreement (EPA).

Sugawara said the EPA had reached a crucial stage and was now awaiting ratification by the parliaments of both countries.

He stressed that focus should not be limited to tax collection alone, adding that the effective utilisation of tax revenues was equally important for sustaining economic growth and attracting foreign investment.