The Metropolitan Chamber of Commerce and Industry (MCCI) cautioned against raising tax rates on high-income earners without broadening the tax base, citing potential risks of money laundering and capital flight. MCCI President Kamran T Rahman emphasized that higher tax rates may deter compliant taxpayers and escalate tax evasion or capital flight during a budget proposal presentation for the upcoming fiscal year 2026-27 in Dhaka.
To maintain competitiveness in the region, MCCI stressed the importance of reasonable tax rates and advocated for expanding the tax base as a more sustainable approach to enhance revenue generation. The chamber underlined the significance of a rational and predictable tax regime to attract investment and ensure adherence in the face of growing tax competition.
Highlighting the current tax system’s shortcomings, MCCI recommended widening the tax base to encompass more individuals and businesses, especially from the informal sector. Despite having over one crore registered taxpayers with electronic tax identification numbers (e-TINs), less than half file returns regularly, indicating systemic weaknesses.
Proposing the introduction of a nominal minimum tax and a simplified digital return-filing system via mobile apps, MCCI aimed to incentivize new taxpayers to formalize their status and foster a culture of compliance. The chamber also raised concerns about the effective tax burden on businesses due to multiple layers of advance income tax (AIT), tax deducted at source (TDS), and other conditions, leading to actual tax rates surpassing statutory levels.
MCCI urged policymakers to transition to an uncomplicated, income-based tax system, reduce complexities associated with corporate tax rates, and enhance digital integration across tax and customs platforms. Additionally, the chamber called for streamlining compliance procedures, rationalizing VAT rates, and improving automated input tax credit mechanisms for efficiency.
In support of small and medium enterprises (SMEs), MCCI recommended targeted tax incentives, lower turnover taxes, and reduced duties on raw materials to bolster competitiveness and support employment and industrial growth. Emphasizing the need for a balanced revenue policy that combines revenue mobilization and facilitation, MCCI cautioned against excessive taxation in the current delicate economic landscape.
