Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Mohammad Hatem has called on the government to simplify the country’s taxation system, warning that the current framework is discouraging both domestic and foreign investment.
Speaking at a recent conference, Hatem described the existing tax structure as overly complex and burdensome for businesses. He questioned the practice of collecting advance income tax regardless of whether companies generate profits or incur losses, arguing that it places unnecessary financial pressure on enterprises.
According to Hatem, many businesses ultimately face a higher effective tax burden than the officially stated corporate tax rate due to advance tax deductions and lengthy refund procedures. He noted that these challenges create cash flow constraints and increase operational costs for companies.
The BKMEA president emphasized that the business community is not seeking lower tax rates but rather a more transparent, predictable, and business-friendly tax regime. He stressed that simplifying tax procedures would improve compliance, enhance investor confidence, and support long-term economic growth.
Hatem also expressed concern over what he described as a conflict of interest within the current system, where the same authorities are responsible for both formulating tax policies and collecting taxes. He suggested that greater institutional separation could improve transparency and accountability.
Warning of the broader implications, he said Bangladesh risks losing investment opportunities to competing markets unless meaningful reforms are introduced. Investors, both local and international, increasingly prefer destinations that offer simpler regulatory frameworks and more efficient tax administration, he added.
Industry stakeholders have long argued that tax system reforms are essential to strengthening Bangladesh’s competitiveness, particularly as the country prepares for its transition from least developed country (LDC) status and seeks to attract higher levels of foreign direct investment.
