With a focus on assisting SME-based businesses, especially in the ready-made garment (RMG) sector, which is one of the biggest contributors to the national economy and jobs, the SME Foundation has urged the government to implement a preferential tax system for SMEs.
The Foundation presented certain tax slabs and VAT exemptions suited to SME turnover levels at a view-exchange meeting on “SME-friendly budget proposals 2025–26,” which was hosted at the capital’s Economic Reporters’ Forum (ERF) auditorium. The SME Foundation and ERF organised the event together.
Mohammad Jahangir Hossain, general manager of the SME Foundation, presented the ideas and suggested that SMEs with yearly sales of up to Taka 1 crore be completely exempt from VAT. He suggested imposing a fixed monthly tax of Taka 35,000 on businesses with annual revenue between Taka 1 crore and Taka 2 crore. For turnovers between Taka 2 crore and Taka 3 crore, the proposed tax rate rises to Taka 75,000 per month; for turnovers between Taka 3 crore and Taka 5 crore, it rises to Taka 1.5 lakh per month.
Small-scale garment makers that are battling with high compliance costs and limited access to financing are anticipated to benefit greatly from the favourable tax structure, as approximately 40 per cent of Bangladesh’s RMG units fall under the SME category. With export revenues of over $47 billion (FY24), the RMG sector is mostly dependent on a wide network of small and mid-sized manufacturers, particularly in backward linkage industries like packaging, accessories, and trimmings.
“Safeguard SME interests and promote sustainable growth,” especially in critical sectors like RMG, is the Foundation’s mission, according to SME Foundation Chairperson Md. Mushfiqur Rahman, who chaired the event as the major guest. He went on to say that the National Board of Revenue (NBR), trade associations, and stakeholders were consulted when developing the ideas.
Managing Director Anwar Hossain Chowdhury echoed the sentiment, underscoring the significant employment generated by SME-based RMG units across the country. “SMEs are the backbone of the economy, and nowhere is that more visible than in the RMG sector, where thousands of small factories employ millions,” he said.
Chowdhury suggested a specific budgetary allocation for the SME Foundation to continue addressing operational barriers, such as low working capital, high utility costs, and delays in regulatory approvals, and urged the government to be more receptive to the needs of small clothing manufacturers.
Additionally, the Foundation suggested lowering the corporate tax for non-listed SMEs from 27.5 per cent to 20 per cent, increasing import taxes on completed goods to safeguard domestic producers, and lowering the VAT rate from 15 per cent to 10 per cent.
The proposals, which resulted from five nationwide consultations and a validation workshop with 34 trade associations and five research institutions, produced more than 300 individual recommendations, according to General Manager Jahangir. Following evaluation, 140 improved recommendations were included in the Foundation’s formal pre-budget document and sent to the NBR.
Stakeholders in the RMG and SME sectors will be keenly monitoring the Government’s June national budget announcement to see if these specific policy initiatives are put into place to support sustained growth in the nation’s most important industrial base.
