Bangladesh Cuts or Waives Minimum Tax on Business Turnover to Support Enterprises

💰 The Bangladesh government revenue authority is set to reduce or waive the minimum tax on business turnover in the current fiscal year, providing relief to businesses struggling amid the ongoing energy crisis and rising costs. The measure was reported by The Financial Express on August 25, 2026.

📝 Tax Reform Details

Under the changes proposed by the National Board of Revenue (NBR), businesses with annual turnover of up to Tk 20 million will be exempt from the turnover-based minimum tax of 1.0 per cent entirely. The restructuring introduces a tiered system based on turnover size.

• ✅ Turnover up to Tk 20 million: EXEMPT (0% tax)
• 💰 Turnover up to Tk 30 million: 0.25% tax rate
• 💰 Turnover up to Tk 40 million: 0.50% tax rate
• 💰 Turnover above Tk 40 million: 1.0% tax rate (unchanged)

🏛 Approval Process

The summary has already been approved by Finance Minister Amir Khosru Mahmud Chowdhury. The NBR has sent the SRO (statutory regulatory order) for vetting by the ministry of law. Officials have said the changes would be given retrospective effect from July 1, 2026.

• ✅ Approved by: Finance Minister Amir Khosru Mahmud Chowdhury
• 📜 SRO sent to: Ministry of Law for vetting
• 📅 Retroactive from: July 1, 2026
• 🏛 Issued by: National Board of Revenue (NBR)

📊 Current vs New System

At present, a blanket 1.0-percent minimum tax is applicable irrespective of the amount of turnover. This puts a relatively higher burden on small and midsize businesses, even when their profit margins are low or they incur losses. The proposed restructuring aims to address this imbalance.

• ❌ Current: Flat 1% minimum tax for ALL businesses
• ✅ New: Tiered system based on turnover size
• 👥 SMEs benefit most from the reform
• 💰 Maintains revenue mobilisation for larger businesses

💲 Rationale for the Reform

Finance ministry sources have said the move comes "to provide relief to traders and companies amid the ongoing energy and gas crises and rising cost of doing business." The energy crisis has been particularly severe, with gas shortages halting production at over 100 factories across Bangladesh.

The proposed changes are aimed at making the tax structure "more business-friendly while maintaining revenue mobilisation," according to NBR officials. The relaxation is expected to benefit small and medium enterprises most.

🏢 Impact on SMEs

Small and medium enterprises (SMEs) will be the primary beneficiaries of this tax reform. Many SMEs operate on thin margins and have been disproportionately affected by the minimum turnover tax, which requires payment even when businesses are loss-making.

• 🏢 SMEs with turnover < Tk 20M: Fully exempt
• 💰 SMEs with turnover Tk 20-30M: 75% reduction in tax rate
• 💰 SMEs with turnover Tk 30-40M: 50% reduction in tax rate
• 📈 Frees up capital for business investment and expansion

🌏 Broader Economic Context

The tax reform comes at a critical time for Bangladesh's economy:

• 📊 GDP growth: 4.14% in FY26 (below potential)
• ⚠ Inflation: Above 9% (9.16% in June 2026)
• 💰 Remittances: Strong ($9.38B in Apr-Jun 2026)
• 📦 Exports: $48.38B in FY26 (marginally up)
• 🏛 Energy crisis: Gas shortages affecting 100+ factories

🏛 Part of Broader Reform Package

The turnover tax reduction is part of a broader package of economic reforms including:

• 📦 New Import Policy Order 2026-2029 easing industrial imports
• 🏛 Framework for free trade zones and central bonded warehouses
• 💰 Bangladesh Bank maintaining accommodative monetary policy
• 🤝 Government seeking 3-year LDC graduation deferral
• 📊 UK confirming duty-free market access post-LDC graduation

📊 This tax reform is a welcome relief for Bangladesh's business community, particularly SMEs that have been disproportionately affected by the minimum turnover tax. Combined with other policy measures, it should help create a more supportive environment for businesses amid the ongoing economic challenges.