A wide-ranging tax relief package is set to feature in Bangladesh’s 2026–27 fiscal year budget, as the government moves to balance revenue pressures with efforts to ease the cost of living and stimulate industrial growth. The forthcoming budget, expected to be the first under a Bangladesh Nationalist Party (BNP)-led administration, places significant emphasis on maintaining public affordability while supporting domestic production.
Despite ongoing constraints linked to International Monetary Fund (IMF) conditions and broader fiscal challenges, policymakers are reportedly opting against sweeping withdrawal of tax exemptions. Instead, several existing tax holidays are being extended, while new incentives are being introduced for emerging and priority sectors. Officials indicate that the approach reflects a deliberate attempt to avoid inflationary pressure on households.
A central feature of the proposed budget is a reduction in taxes on essential goods. The withholding tax on around 60 staple commodities—including rice, wheat, potatoes and spices—is expected to be reduced to 0.5 per cent. Regulatory duties on essential imports are also set to be removed entirely, aiming to stabilise market prices for consumers.
The personal income tax threshold is likely to rise further, from Tk 375,000 to Tk 400,000, while the lower 5 per cent tax slab is expected to be abolished. Corporate tax rates, however, are projected to remain unchanged in order to maintain industrial cost stability.
Several targeted exemptions are also under consideration. Income from freelancing and digital content creation is expected to be fully exempt from taxation, a move designed to boost foreign currency inflows. Renewable energy initiatives, particularly solar power, may receive extended tax holidays up to 2035, alongside incentives for equipment imports and consumer billing discounts.
Environmentally friendly transport is another priority area. Registration taxes on electric vehicles are expected to be reduced, while local manufacturing of electric cars and e-bikes may receive additional fiscal support. Import duties on charging infrastructure and electric buses are also set to be withdrawn.
Key proposed tax measures
Area
Proposed change
Essential goods
Withholding tax cut to 0.5%; regulatory duty removed
Income tax
Threshold raised to Tk 400,000; 5% slab abolished
Freelancing & digital content
Full tax exemption proposed
Corporate tax
Rates unchanged
Solar energy
Tax holiday extended to 2035
Electric vehicles
Reduced registration tax; duty relief on imports
Pharmaceuticals & healthcare
Selected import duties and VAT removed
SMEs & women entrepreneurs
Higher turnover tax exemption thresholds
In manufacturing, incentives are expected for mobile phone production, with reduced withholding tax on raw materials and extended VAT exemptions until 2030. Similar relief measures are being considered for televisions, refrigerators and computer hardware industries.
The pharmaceutical sector may benefit from duty exemptions on key raw materials, while agriculture is set to receive relief through the removal of VAT on fertilisers and pesticides. Healthcare-related imports, including kidney dialysis filters, heart stents and intraocular lenses, are also expected to become tax-free or subject to reduced VAT.
Small and medium enterprises (SMEs) are likely to benefit from higher turnover tax exemption limits, with additional support targeted at women entrepreneurs. Meanwhile, export incentives are expected to be rationalised through a reduction in withholding tax on cash incentives.
Overall, the proposed budget reflects a strong tilt towards tax relief and sector-specific incentives, even as fiscal consolidation remains a parallel objective.
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