Written by The Banking Post
Tax Deducted at Source (TDS) has become a growing burden on Bangladeshi businesses, inflating operational costs and driving up prices, according to new research by the Business Initiative Leading Development (BUILD).
The study, unveiled Wednesday at a dialogue on policy reform at the Dhaka Chamber of Commerce and Industry (DCCI), found the National Board of Revenue (NBR) collects TDS under 111 sub-heads across industries. Taxes under 40 heads are non-refundable, while only 0.29% of deductions from the remaining 71 refundable heads have been reclaimed—turning 99.71% of TDS into a de facto minimum tax.
“TDS has pushed up product costs, which in turn fuels inflation,” said Md Nooruzzaman, the study’s lead researcher. “When combined with minimum tax, the total burden in some sectors triples.”
The report shows the total tax incidence (TTI) in the cement industry reaches about 75%, while in steel it approaches 89%. DCCI President Taskeen Ahmed noted that large companies with thin margins—often only 1–1.5%—struggle to stay profitable due to TDS and turnover tax.
Abul Kasem Khan, BUILD chairperson, said one of his firms has seen TTI exceed 50% for two years, warning: “If this continues for five years, the company may have to close.”
Snehasish Barua, partner at Snehasish Mahmud & Co, urged a cut in TDS rates and reform of the refund system, saying the current minimum tax on gross receipts is “not justified.”
NBR Chairman Md Abdur Rahman Khan described TDS as a globally recognised, “painless” way to collect revenue but admitted Bangladesh faces adjustment and refund challenges. He said an automated VAT refund system is expected next month, and pledged to widen the tax net and automate income-tax processes to ease pressure on compliant firms.
He also criticised illogical tax demands, citing a small company asked to pay Tk70 million despite having only Tk10 million in paid-up capital, and promised to address such cases.
Social Welfare Secretary Dr Mohammad Abu Yusuf called for linking minimum tax to profit margins rather than turnover, while BUILD CEO Ferdaus Ara Begum said businesses are “feeling the pain” of what is meant to be a painless system.
