Instability in government policies and taxes discourages foreign investment in Bangladesh, according to the Foreign Investors Chamber of Commerce and Industry.
FICCI president Zaved Akhtar and other members made this observation at a press conference on the proposed national budget.
Finance minister Abul Hassan Mahmood Ali placed the proposed budget for the 2024-25 financial year at Jatiya Sangsad in the capital Dhaka on June 6.
Zaved emphasised the need for a balanced approach to ensuring fiscal stability.
He expressed concern over the removal of incentives from private economic zones and high-tech parks while maintaining the same for government EZs, saying that the move could erode investor confidence.
High effective tax rates (ETR) remain a key concern, he said.
He said that the FICCI appreciated the 15-per cent income tax rate for private funds, but noted concerns about exempting public funds from taxation, creating disparities.
The proposed increase in personal income tax rates may be seen as unfair and could encourage tax evasion, he said.
The FICCI suggested maintaining the past year鈥檚 tax rates for the financial year 2024-25.
The NBR aims to achieve Tk聽4,80,000 crore revenue, 60 per cent of the proposed budget.
The FICCI raised concerns about the achievability of this target.
The trade body highlighted the low revenue-to-gross聽 domestic product ratio and the need for expanding the taxpayer base.
They suggested sector-wise revenue analysis and automating tax, value-added tax and customs administration to simplify tax collection and enhance efficiency.
Without these reforms, VAT credit complexities and financial strain on businesses may persist.
With a budget size of Tk聽7,97,000 crore, constituting 14.2 per cent of GDP, the government targets 6.75 per cent GDP growth and 6.5 per cent inflation for 2024-2025. The FICCI sees these targets as ambitious but achievable with an effective execution plan.
However, it expressed concerns over additional duties on telecommunications, carbonated beverages and water purifiers, which could hamper attracting potential FDI.
The FICCI also highlighted the need for financial sector reform.
It welcomed the acceptance of their proposed amendments in the Finance Bill 2024.
These amendments include simplifying tax deduction at source for industrial raw materials and extending the time for monthly withholding tax return submission.
The trade body stressed reducing tax rates while widening the tax net would create a fairer and more efficient tax system, boosting compliance and economic growth.
The FICCI also supports digital tax integration and reforms such as merging the three wings of the National Board of Revenue and implementing the national single window project to streamline tax processes and encourage compliance.
Former FICCI president Rupali Haque Chowdhury criticised a budget proposal for sudden cancellation of benefits for investors in private economic zones.
She warned that such abrupt policy changes send wrong signals to investors and make it harder to attract and retain foreign investments.