The Institute of Chartered Accountants of Bangladesh (ICAB) on Thursday has broadly welcomed the national budget for fiscal year 2026-27 as a business-friendly framework, while raising concerns about the heavy reliance on bank borrowing to finance the development budget.

ICAB President NKA Mobin, in a statement, congratulated the government for presenting what he described as a strategic and forward-looking budget.

He also acknowledged Finance and Planning Minister Amir Khosru Mahmud Chowdhury for tabling the Tk 9,38,000 crore budget, equivalent to 13.7 percent of GDP, amid significant domestic and global economic headwinds including the Iran-Israel conflict, energy crisis, high inflation, and sluggish business investment.

Bank Borrowing Concern

While welcoming the Tk 3,16,075 crore development budget, of which Tk 3,00,000 crore falls under the Annual Development Programme (ADP), ICAB cautioned that an estimated 35 percent of the development outlay, or Tk 1,12,000 crore (46 percent of the total deficit financing of Tk 2,43,000 crore), is expected to be met through bank borrowing.

The institute warned this could constrain credit availability for the private sector and dampen private investment.

ICAB also flagged that a 0.2 percent tax on retail trade and a 0.5 percent tax on certain agricultural products could add to inflationary pressures.

Revenue Measures

On broadening the tax net, ICAB said the Document Verification System (DVS), a joint initiative with the National Board of Revenue (NBR), would significantly support revenue mobilisation.

The institute also commended NBR for involving ICAB in digitising corporate tax returns.

Among income tax changes, ICAB welcomed the five-year lock-in of tax rates as a facilitator of long-term investment planning.

It also praised the abolition of the “minimum tax” provision to lower effective tax rates for entities, new provisions for advance income tax adjustment and carry-forward, and universal self-assessment return filing to speed up tax processing.

ICAB additionally welcomed startup tax incentives, including exemptions from sections 55 and 56 and a zero percent turnover tax during growth years, along with mandatory withholding identification numbers (WIN) for source-tax entities, and a reduction in tribunal appeal deposit from 10 percent to 3 percent of disputed amounts.

However, the institute urged reconsideration of: a 10 percent surcharge on listed companies distributing less than 30 percent of post-tax profit as dividend, arguing it could limit capital retention by asset-heavy companies; mandatory advance tax collection of 0.2 percent on direct sales to retailers; and sector-based minimum turnover taxes that could burden low-margin businesses.

VAT and Customs

On the VAT front, ICAB welcomed the exclusion of “labour” from the definition of inputs, removing disputes over input tax credits for manpower services, VAT exemptions for content creators and freelancers, reduction of VAT appeal deposits from 10 percent to 1 percent, and a cap on penal interest to 24 months for pre-July 2022 disputes.

On customs, the institute praised the introduction of the “Importer on Record” definition for clearer legal accountability, new free trade zone (FTZ) provisions with operational flexibility, reduction of appeal security from 10 percent to 1 percent, and a general order mechanism to determine assessable value based on internationally recognised reference prices.

ICAB did flag concern over a 2 percent pre-deposit requirement for High Court customs appeals, calling it a potentially disproportionate barrier in large-value disputes.

“The budget is broadly business-friendly and should help Bangladesh transition from a developing to a developed economy,” Mobin said, expressing hope that ICAB's recommendations, including those aimed at revenue growth and reducing legal ambiguity would contribute positively to employment generation and economic progress.