Bangladesh could unlock a far larger wave of desperately needed foreign investment�"particularly from American corporations�"if the upcoming national budget finally dismantles the country’s punitive web of overlapping taxes, double taxation complications and bureaucratic compliance hurdles that continue to erode investor confidence.
This stark warning came from Syed Ershad Ahmed, President of the American Chamber of Commerce in Bangladesh, in an exclusive interview with The Daily Observer ahead of the Finance Minister’s budget announcement next June.
“Double taxation remains one of the most critical barriers for foreign investors in Bangladesh, and it must be addressed decisively in the upcoming national budget,” Ahmed said, arguing that unless the revenue regime becomes transparent, predictable and internationally aligned, Bangladesh will continue to lose ground in the race for global capital.
His remarks come at a time when AmCham has repeatedly pressed the government for “predictable tax policies”, “reduced overlapping burdens” and “structured tax stability frameworks” in recent pre-budget engagements with the National Board of Revenue, saying these are now central to attracting and retaining foreign capital.
Ahmed maintained that Bangladesh is strategically positioned to receive substantial US investment in infrastructure, logistics, manufacturing, technology and energy, but foreign firms remain reluctant because the tax regime still imposes duplicated liabilities, delayed treaty adjustments and cumbersome refund procedures.
“Foreign companies operating in Bangladesh continue to face overlapping tax burdens, procedural complications and delays in adjustments under Double Taxation Avoidance Agreements,” he said.
According to him, these inefficiencies sharply raise the cost of doing business, lock up corporate working capital through delayed Advance Income Tax refunds, and create the kind of uncertainty that long-term investors simply refuse to absorb.
“Bangladesh is poised for sizeable US investment, but punitive double taxation, delayed treaty relief and refund delays continue to deter investors.”
In a globally competitive environment where countries are aggressively courting multinational corporations with streamlined compliance systems, Bangladesh’s revenue bureaucracy sends precisely the opposite message.
The concern is especially significant because Bangladesh is currently trying to convert improving macro-level investor sentiment into sustained capital inflows. Official data show net foreign direct investment surged by more than 200 per cent year-on-year in the July�"September quarter of 2025, while cumulative inflows in the first nine months rose to $1.41 billion.
Yet business chambers warn that this momentum may not be sustained without deep fiscal and administrative reforms.
Ahmed, a veteran corporate strategist with more than four decades of experience across major multinational firms including Expeditors, Philips and Singer, said Bangladesh’s current tax framework has failed to evolve in line with the economy’s growing ambition.
He noted that although the country has made visible progress in industrialisation and export expansion, its revenue system remains narrow, compliance-heavy and excessively dependent on indirect taxation.
Only around one-third of registered taxpayers are actively filing returns, while the burden continues to fall disproportionately on already compliant businesses, particularly formal-sector corporates.
“Expanding the tax net should mean bringing new taxpayers into the system�"not squeezing the same compliant investors with additional complexity,” he said.
Ahmed stressed that investor confidence is built on certainty before capital is committed, not after legal disputes and tax claims begin.
To reverse the current drift, he laid out a three-pronged fiscal reform agenda for Budget 2026�"27.
First, he called for a radical simplification of the tax structure by rationalising withholding taxes, ensuring consistent implementation of international tax treaties, and introducing a formal advance tax ruling mechanism so that investors can know their liabilities before entering the market.
Second, he urged the government to make investment incentives more targeted, transparent and regionally competitive, with clear guidance on tax holidays, sector-specific benefits and duration of incentives�"especially for export-oriented and technology-intensive sectors.
Third, he demanded a sweeping overhaul of administrative efficiency through fully digital VAT refunds, time-bound customs clearance, fewer manual certifications and better coordination among tax, customs and regulatory agencies.
These demands mirror AmCham’s broader policy submissions over the past year, where the chamber repeatedly argued that Bangladesh’s fiscal framework remains too conventional and lacks bold reform to stimulate private investment and job creation.
Ahmed also placed strong emphasis on digital transformation, saying expanded e-payments, integrated tax automation and paperless compliance systems are no longer optional but essential to reducing informality and boosting revenue credibility.
Looking beyond taxation, he warned that Bangladesh’s approaching graduation from Least Developed Country status makes competitiveness reforms even more urgent.
Efficient logistics, faster trade facilitation, stronger capital markets, sustainable industrial incentives and deeper digital financial inclusion will determine whether Bangladesh remains an attractive production base in the post-LDC era, he observed.
Despite the persistent bottlenecks, Ahmed said he remains cautiously optimistic that Bangladesh can still become a preferred destination for major US investors�"provided the upcoming budget sends the right signal.
“American companies have the capacity to invest significantly in large-scale projects while bringing advanced technology and expertise,” he said, adding that such investment will only materialise when fairness, predictability and transparency are institutionalised.
In his concluding message, the AmCham president delivered a blunt reminder to policymakers:
“The upcoming budget is not merely a fiscal document�"it is Bangladesh’s investment signal to the world. It must tell global investors that this country is ready to compete, ready to ensure fairness, and ready to welcome capital without trapping it in tax uncertainty.”
