MCCI welcomes FY27 budget, warns of challenges in revenue collection

The Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka, has welcomed the proposed national budget for FY2026-27, describing it as a bold initiative aimed at economic recovery, employment generation and fulfilment of electoral commitments, while cautioning that its success will depend on structural reforms, effective implementation and improved governance.

In its reaction to the budget presented by Finance and Planning Minister Amir Khosru Mahmud Chowdhury on Thursday, MCCI said the Tk938,000 crore budget -- the largest in the country's history -- comes at a challenging time marked by persistent inflation, global uncertainties, high interest rates, sluggish investment and revenue collection difficulties.

The chamber praised the government's focus on economic recovery, social protection and employment generation, as well as its target of achieving 6.5% GDP growth and reducing inflation to 7.5%.

However, MCCI expressed concern over the ambitious revenue collection target of Tk695,000 crore for FY2026-27, including Tk604,000 crore to be collected by the National Board of Revenue (NBR).

It noted that NBR collected only Tk326,928 crore, or about 65% of its revised target, during the current fiscal year up to April.

"Without meaningful structural reforms, efforts to achieve this target may increase pressure on taxpayers and raise the prices of essential commodities," the chamber said.

MCCI stressed the need for tax policy reforms, automation of tax administration, expansion of the tax net and improved public expenditure management to ensure successful implementation of the budget.

The chamber also voiced concern over declining investment, noting that total investment fell to 27.93% of GDP in FY2025-26, the lowest level in a decade. It warned that reduced investment could limit employment opportunities and increase poverty risks.

While welcoming the record Tk300,000 crore Annual Development Programme (ADP), MCCI questioned the government's implementation capacity, pointing out that only 41.41% of the ADP had been implemented during the July-April period of the outgoing fiscal year.

The business body praised the government's expanded social safety net programmes, including allocations for the Family Card Programme, Farmer Card Programme and Religious Allowance Programme.

It appreciated increased budgetary allocations for education and health, particularly plans to raise education spending to 2% of GDP and health spending to 1.01% of GDP.

On taxation, MCCI supported the government's policy of broadening the tax base without increasing tax rates. It welcomed reforms relating to tax deducted at source (TDS), reductions in appeal deposit requirements and higher allowable limits for business expenses.

However, the chamber expressed disappointment that the budget did not address concerns over the minimum turnover tax imposed on companies, saying it could negatively affect business cash flow and competitiveness.

MCCI also raised concerns about proposed data-sharing and connectivity arrangements between government agencies, warning that inadequate safeguards could expose taxpayers to privacy and security risks.

The chamber called for comprehensive legal and technological protections before implementing such measures.

Regarding VAT reforms, MCCI welcomed the inclusion of labour in the definition of "input", the continuation of VAT exemptions on transportation services for goods and raw materials, and the shift from monthly to quarterly VAT return filing.

The chamber urged the government to accelerate automation, introduce e-invoicing systems and expand the use of Electronic Fiscal Devices (EFDs) to improve VAT collection and compliance.

It reaffirmed its commitment to working with the government to improve the business environment, strengthen tax administration and support economic reforms aimed at sustainable and inclusive growth.