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To reduce business costs, advance tax on imported industrial raw materials will be cut to 4 percent from 5 percent, while source tax on interest payments on foreign loans will be halved to 10 percent from 20 percent.

Tax deducted at source will be treated as advance tax rather than minimum tax, allowing businesses to adjust liabilities and claim refunds. Exporters will also see the advance income tax on export cash incentives reduced to 5 percent from 10 percent.

Sectors identified as potential growth drivers—electronics, semiconductors, electric vehicles, batteries, solar energy, shipbuilding and pharmaceuticals—will receive duty and tax concessions.

To encourage investment beyond Dhaka and Chattogram, accelerated depreciation benefits have been proposed for manufacturing, tourism and sports projects.

Hospitals and universities will continue to enjoy advance tax exemptions on imported capital machinery.

The budget also promises a mandatory online single-window system for approvals and licences, a measure the ruling BNP specifically pledged in its election manifesto. Approvals related to fire safety, environmental clearance, land use and building design will be integrated into a single platform.

Under the proposal, business licences would be issued within seven days, company registration completed within 48 hours, work permits for foreign experts granted within seven days and investor visas issued within 10 days. In some cases, applications may be deemed approved if agencies fail to meet prescribed deadlines.

GOOD STEPS BUT INSUFFICIENT: ECONOMISTS

Economists say the incentives are a step in the right direction, but insufficient on their own.

Abdur Razzaque, chairman of the Research and Policy Integration for Development (RAPID), said tax incentives alone would not be enough to revive investment if businesses remained uncertain about future demand and economic conditions.

He pointed to the erosion of purchasing power after years of high inflation.

“When consumers spend less, businesses see weaker demand and become reluctant to invest,” he said, calling for political stability and improvements in law and order to restore confidence.

He added that incentives for small businesses and lower borrowing costs may provide some support, but warned that excessive stimulus could add to inflationary pressures.

The economist also said subdued imports were constraining production and exports, while Bangladesh faces growing competition from India and Vietnam as domestic inflation erodes its price competitiveness.

Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM), said the proposed measures send a positive signal to both local and foreign investors at a time when private investment remains weak.

Keeping corporate tax rates unchanged may help reduce policy uncertainty, he said.

Raihan welcomed reforms aimed at improving trade logistics, including the establishment of Free Trade Zones.

However, he cautioned that building sectors such as semiconductors and electric vehicles requires more than tax breaks. “It requires skilled workers, reliable power supplies, testing facilities, financing and predictable regulations.”

Without those foundations, incentives could encourage import-dependent assembly rather than genuine industrial upgrading.