Tax reforms to expand fiscal space, help ensure compliance

Recent changes in income tax, value added tax (VAT), and customs laws are designed to expand fiscal space, modernise tax administration, and support Bangladesh's long-term development goals, speakers said at a seminar on Wednesday.

They noted that automation, stricter compliance, and the advisory role of professionals will be crucial in guiding businesses through the reforms, which are also expected to reduce compliance burdens for taxpayers.

The changes align with national priorities such as climate resilience, renewable energy, and developing digital skills to prepare a workforce for the Fourth Industrial Revolution.

The Institute of Chartered Accountants of Bangladesh (ICAB) organised the seminar on the Finance Ordinance 2025 through Zoom.

National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan attended as chief guest, while AKM Badiul Alam, member (Tax Policy), and Mohammad Mobinul Kabir, member (Custom Policy & ICT), joined as special guests.

The session was moderated by AF Nesaruddin, ICAB past president, while keynote papers were presented by Rakesh Saha, partner, Tax & Regulatory Services at Ernst & Young Advisory Services Bangladesh Ltd; Sarker Nahidul Islam, director, Tax and Advisory Services at Rahman Rahman Huq, Chartered Accountants; and Mohammad Mutasim Hossain, director, Taxation & Corporate Affairs at ACNABIN, Chartered Accountants, according to a press release.

In his welcome remarks, ICAB President NKA Mobin said the ordinance reflects a strategic effort to raise the country's tax-to-GDP ratio through automation and infrastructure expansion.

"This is essential for creating the fiscal space required to fund Bangladesh's ambitious development goals in renewable energy, agriculture, and critical infrastructure," he said. He also highlighted the role of chartered accountants in ensuring compliance and providing advisory services under the new fiscal framework.

Keynote presenters highlighted major revisions in VAT deduction and collection at source (VDS) guidelines. Businesses can now adjust VDS through VAT returns instead of separate deposits, reducing compliance time.

VAT deduction will be exempted if invoices are issued through PKI or POS machines with Business Identification Numbers, and the period for claiming decreasing adjustments has been extended to six tax periods.

The reforms also limit VAT non-deduction facilities to the first tier of subcontractors, resolving disputes over applicability in lower tiers.

Other measures include relief for commercial importers paying advance tax at the import stage, conditional VAT exemptions on locally manufactured medicines and essential goods such as betel leaves and bamboo, and zero-rating of certain services provided to non-residents.

Customs reforms also exempt transport contractors importing inputs for producing export-oriented goods.

Speakers concluded that the reforms present both opportunities and challenges, simplifying compliance procedures while demanding greater accountability, automation, and professional expertise.

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