The Foreign Investors’ Chamber of Commerce and Industry (FICCI) has welcomed several reform initiatives in the proposed Finance Bill 2026, describing them as progressive steps toward improving the investment climate, while also raising concerns over fiscal targets and policy implementation challenges.

In a statement issued on Thursday, FICCI said the Finance Bill 2026 reflects the government’s commitment to building an inclusive, investment-driven economy under the 3R framework—Recovery, Restoration and Reconstruction.

It noted that measures aimed at simplifying tax administration, enhancing digitalisation, and reducing compliance burdens would strengthen investor confidence.

The chamber appreciated key reforms including treating tax deducted at source as advance tax, introducing automated and faceless tax refund systems, removing restrictions on legitimate business expense deductions, and increasing limits for perquisites and promotional expenditures.

It also welcomed the shift to accrual-based recognition of interest expenses and reduced disputed tax burdens at the appeal stage.

Under the VAT regime, FICCI lauded the transition from monthly to quarterly VAT returns, saying it would significantly reduce compliance costs for businesses. It also supported reductions in withholding tax on raw material imports, foreign loan interest, and machinery rentals, alongside the introduction of the “BanglaBiz” platform and simplified profit repatriation procedures.

However, the chamber expressed concern over the absence of a long-term corporate tax reduction roadmap, warning that it could weaken Bangladesh’s competitiveness in attracting foreign direct investment.

It also flagged challenges related to the mandatory implementation of eVAT for large taxpayers without a transition period, and the proposed increase in the highest personal income tax rate to 35%, which it said may raise employment costs for skilled foreign professionals.

FICCI further urged withdrawal of the proposed 0.2% Advance Income Tax at the retailer level, extension of cashless transaction incentives to private limited companies, and restoration of investment rebate benefits for individual taxpayers.

It also recommended that all fiscal measures be implemented prospectively to avoid uncertainty for investors.

On the budget framework, FICCI noted that total expenditure for FY2026–27 stands at Tk9,38,000 crore, or 13.7% of GDP, with a budget deficit of Tk2,43,000 crore.

The revenue target of Tk6.95 lakh crore, it said, appears highly ambitious and would require significant expansion of the tax base.

The chamber emphasized that successful implementation of the budget will depend on strengthened revenue mobilisation, fiscal discipline, institutional capacity, and continued efforts to improve the ease of doing business in the country.