A senior official of the National Board of Revenue (NBR) said, “The upcoming budget is being designed to provide relief to ordinary people. Our main target is the wealthy and luxury sectors. The plan is to collect more revenue from those who have greater financial capacity.”
Officials concerned said that over the past few years, pressure on the market for essential goods has increased due to the dollar crisis, rising import costs, fuel expenses, and weaknesses in the supply chain. As a result, low-income and lower-middle-class families have suffered the most. The rising prices of rice, lentils, edible oil, and sugar have significantly increased living costs.
In this situation, the NBR believes that reducing taxes could lower business costs at the import and supply stages. However, officials also acknowledged that tax reductions alone will not bring immediate major changes to the market because factors such as transportation costs, hoarding, import dependency, and supply chain weaknesses also play important roles in pricing. Therefore, the government is emphasizing stronger market monitoring to ensure consumers benefit from the tax relief.
In the upcoming budget, the government plans to impose additional income tax on luxury private cars, jeeps, helicopters, and aircraft. There is also a proposal to increase advance income tax on expensive electric vehicles, despite them being environmentally friendly. However, the existing engine-capacity-based tax structure for ordinary middle-class vehicles may remain unchanged.
On the other hand, there are plans to increase taxes on firearm license renewals. Currently, no advance income tax is required for renewing licenses for pistols, revolvers, or shotguns. Under the new budget proposal, advance income tax ranging from Tk 30,000 to Tk 50,000 may be imposed depending on the type of firearm.
For the first time, the budget also proposes bringing battery-powered rickshaws under the tax net. According to the proposal, an annual tax of Tk 5,000 may be imposed in city corporation areas and Tk 2,000 in municipality areas.
Wealth Tax
The government is considering reforms to the “wealth tax” or wealth surcharge system to bring high-net-worth individuals more effectively under taxation. Stricter measures may be introduced for taxing multiple houses, high-value land, luxury vehicles, and cash assets. According to NBR sources, efforts are underway to coordinate data from bank accounts, land registrations, vehicle registrations, and savings certificates to prevent concealment of taxable assets. Special monitoring is planned for individuals whose visible assets do not match the information in their income tax returns. Discussions are also ongoing to strengthen international information exchange to verify assets or money laundering abroad.
Possible Changes in Incentives
The government has initiated a review of long-standing tax exemptions and incentives in various sectors. Discussions are underway to limit unnecessary tax benefits for large industrial groups and corporate institutions. Existing tax holidays in some export-oriented sectors may gradually be reduced. At the same time, limited-term tax incentives may continue for investments in technology, renewable energy, agro-processing, and high-tech industries.
Bringing Small Businesses Under VAT
The government plans to bring small traders at the upazila and district levels, grocery stores, mobile phone and electronics retailers, local wholesale shops, and small restaurants under the VAT network. To achieve this, it is considering introducing a simplified package VAT system. Businesses would be able to register easily by paying a fixed monthly VAT amount. The NBR believes that the government is currently losing significant revenue because many small businesses remain outside the tax and VAT system.
Higher VAT on Soft Drinks and Cosmetics
VAT and supplementary duties may be increased on carbonated beverages, energy drinks, ice cream, fruit juice, and various cosmetic products. According to the NBR, these products are generally associated with non-essential or luxury consumption, making it possible to collect more revenue from higher-income consumers.
Tax Adjustments on Edible Oil and Industrial Raw Materials
There are discussions about increasing VAT on some import-dependent products such as red seed oil, canola oil, and colza seed oil. On the other hand, duties on certain industrial raw materials and intermediate goods may be reduced to lower production costs. The tax structure is being reorganized with the goals of protecting local industries and reducing import dependency.
Monitoring Taxes on Digital and Online Services
The government plans to enforce VAT collection more strictly on advertisements and online services purchased from foreign digital platforms such as Facebook, YouTube, and Google. At the same time, emphasis is being placed on automated information exchange systems to monitor transactions in e-commerce and online businesses.
New Taxes on Motorcycles and Vehicles
There are plans to bring motorcycle owners under an engine-capacity-based advance income tax system for the first time. Additionally, the government aims to increase revenue from wealthy groups by imposing extra taxes on expensive cars, jeeps, helicopters, and private aircraft.
Registration and Tax on Battery-Powered Rickshaws
To regulate illegal and unregulated battery-powered rickshaws, the government plans to introduce registration and taxation systems. Different annual tax rates may be set for city corporation and municipality areas. The government believes this will also increase revenue for local government institutions.