BKMEA chief criticises tax system, calls for simplification to boost investment

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Mohammad Hatem has strongly criticised the country’s existing taxation framework, terming it “unethical” and overly complex, and warned that it is discouraging both local and foreign investment.

Speaking at a Business Talk programme hosted by Bangladesh Pratidin, he said there is an inherent conflict of interest in the system where those involved in formulating tax policy are also responsible for tax collection.

“We strongly oppose this arrangement and consider it unethical. It should not continue in any form,” he said.

Hatem noted that although the government has indicated a reduction in corporate tax rates is not feasible, the business community is not insisting on a cut.

“We agree that tax rates do not need to be reduced. Let them remain as they are, but the system must be simplified,” he said.

He further criticised the current mechanism of advance income tax, arguing that tax is being collected regardless of whether a company makes profit or suffers losses.

According to him, businesses are often taxed even in loss-making situations, which he described as unjust.

Explaining the burden, he said that even if the corporate tax rate is taken as an example at around 12%, the effective amount collected in practice can be much higher due to advance deductions and the absence of refunds.

“This creates a situation where the effective tax rate becomes much higher than the official rate,” he said, adding that such practices distort the real tax burden on businesses.

He warned that the present system creates what he described as an “illusion” in tax collection and discourages investment.

“If this tax policy is not corrected, investment in the country will not grow. Neither domestic entrepreneurs nor foreign investors will come forward,” he added.