New Dhaka Times: Desk Report
In the new budget, whether a business is making a profit or incurring a loss—paying tax has been made mandatory in all cases. Economic Advisor Salehuddin Ahmed has proposed this in the 2025–26 fiscal year budget.
According to the proposed Finance Bill, the turnover tax or transaction tax for any company has been raised from the current 0.6% to 1%. This transaction tax means that if a company earns 100 Taka by selling products or services, the government will take 1 Taka as tax—regardless of whether the company makes a profit or not.
Some may think that 1 Taka out of 100 isn’t much. But it must be noted that this tax is in addition to VAT or any other taxes and is separately included under income tax. So, even if a company ends the year with a loss, it will still have to pay this tax. However, there is an option to adjust this tax in the following fiscal year.
Let’s say a company sells products worth 100 crore Taka. It will have to pay 1 crore Taka in transaction tax on its sales. But if the company ends up with a 10 crore Taka loss at the end of the year, even though it won’t fall under corporate tax, the government will still collect 1 crore Taka as transaction tax. Even though it’s termed a transaction tax, in reality, it behaves like corporate tax.
This type of tax system impacts loss-making companies the most. For companies that make large profits, this tax doesn’t pose much of a problem, as they pay a significant amount in income tax at the end of the year. Therefore, the transaction tax carries relatively less significance for them.
Transaction tax has been in effect in Bangladesh for a long time, and businesses have long objected to it. Especially, telecom companies have demanded that this tax be reduced or completely removed. In this budget, the tax rate for the telecom sector has been reduced from 2% to 1.5%.
On the other hand, tobacco and tobacco product manufacturers, as well as soft drink producers, will continue to pay the existing 3% tax. However, all other sectors previously not under this tax will now be subject to a 1% transaction tax. Additionally, the corporate tax for general companies is set at 27.5% (reduced to 25% if bank transactions reach a certain threshold).
The Finance Bill also states that if a new investment—outside of tobacco, telecom, and beverage companies—starts commercial production, it will be subject to only 0.1% transaction tax for the first three years.
Snehasish Barua, Director of tax consultancy firm SMAC Advisory Services Ltd., stated that a 1% transaction tax will put significant pressure on companies operating at a loss or with marginal profit. As a result, they may have to pay the tax out of their capital, which could increase the tendency of tax evasion. This will harm those companies that pay taxes in compliance with the law.
He also mentioned that the burden of this tax has increased for individuals as well. Where it was previously 0.25%, it has now been increased to 1%.
New Corporate Tax Structure
According to the economic advisor’s budget speech, the corporate tax for non-listed companies will be 27.5%. However, if a company conducts a single transaction of more than 5 lakh Taka and annual transactions exceeding 36 lakh Taka through banking channels, the tax rate will be reduced to 25%. This rate will remain the same for the 2026–27 and 2027–28 fiscal years.
For publicly listed companies, the tax rate has been set at 22.5%. However, if all their transactions beyond the specified limit are done through banking channels, the tax rate will drop to 20%. This benefit will also remain for the next two tax years, but all transactions must be through the banking system.