The Foreign Investors' Chamber of Commerce and Industry (FICCI) has welcomed the government's strategic Three-R (Recovery, Restoration and Reconstruction) framework underpinning the proposed Finance Bill 2026 and the budget for FY2026-27, while raising concerns over provisions that could weigh on Bangladesh's regional competitiveness.

In a statement on Thrusday, FICCI described the Finance Bill as a positive, progressive and business-friendly initiative, citing the government's commitment to bringing greater clarity, simplification, predictability and digitalisation to the tax, VAT and customs regime.

Among the measures it commended, FICCI highlighted the reclassification of Tax Deducted at Source (TDS) as advance tax rather than minimum tax, a move it said aligns with international standards and will significantly ease working capital pressure on businesses.

The chamber also welcomed the proposed automated, faceless refund mechanism; the removal of a provision that disallowed legitimate business expenses for non-deduction of tax at source; higher ceilings on perquisites and promotional expenditure; accrual-based interest expense allowances; and a reduction in disputed tax liability at the appeal stage.

On the VAT front, FICCI praised the option of quarterly return filing in place of monthly submissions, saying it would substantially reduce compliance burdens and administrative costs. Lower withholding tax rates on raw material imports, foreign loan interest and machinery leasing were also welcomed, alongside the launch of the 'BanglaBiz' platform and simplified procedures for repatriating capital and profits.

However, the chamber flagged several concerns. It cautioned that without a long-term roadmap for reducing corporate tax rates, Bangladesh risks falling behind regional competitors in attracting foreign direct investment.

It also warned that the abrupt mandatory rollout of e-VAT for large and multinational taxpayers, without adequate transition time or ground-level preparation, could create serious operational difficulties.

FICCI expressed concern over the proposed increase in the top personal income tax rate to 35 percent, saying it would raise the cost of engaging skilled foreign professionals.

It also pointed to a lack of clear guidelines on allowable deductions amid global inflation, which could inflate compliance costs for multinationals.

The chamber strongly urged withdrawal of the proposed 0.2 percent Advance Income Tax (AIT) collection at the retail level, describing its implementation as impractical and operationally burdensome.

It further called for extending cashless transaction incentives to private limited companies and restoring investment tax rebates for individual taxpayers to encourage domestic savings.

FICCI stressed that all fiscal measures should be applied prospectively, warning that retrospective implementation creates market uncertainty and discourages long-term investment.

On the fiscal framework, FICCI noted that the proposed budget of Tk 9.38 lakh crore, equivalent to 13.7 percent of GDP, represents a substantial increase over the previous year. Major allocations for human development include Tk 1,36,606 crore for education and Tk 69,409 crore for health.

However, the chamber described the total revenue target of Tk 6.95 lakh crore as overly ambitious, requiring revenue growth of between 23 and 42 percent over last year's target, a level it considered unrealistic under current economic conditions. Financing a Tk 2.43 lakh crore budget deficit will require mobilisation from both domestic and external sources.

The chamber said the ultimate success of Finance Bill 2026 would depend on effective implementation, policy consistency, stronger institutional capacity and continuous improvement in the ease of doing business.