NBR Scraps 1pc Turnover Tax for Firms up to Tk 2cr, Delivers Tax Relief

The National Board of Revenue (NBR) has scrapped the 1 per cent minimum turnover tax for businesses with annual turnover of up to Tk 2 crore, delivering a major tax relief to thousands of small enterprises that were previously forced to pay tax even when operating at a loss.

The landmark change, effective from August 31, 2026, removes a tax burden that business leaders have long criticised as punitive because it was imposed on turnover regardless of whether a company made a profit or suffered a loss.

Under the revised provision, businesses and companies with annual turnover above Tk 2 crore but up to Tk 4 crore will now pay turnover tax at a reduced rate of 0.5 per cent.

Businesses with turnover above Tk 4 crore, however, will continue to face the existing 1 per cent minimum turnover tax.

The reform effectively ends the practice of imposing a fixed turnover-based tax on the smallest businesses during unprofitable periods, offering much-needed breathing space to low-margin enterprises struggling with rising operating costs and weak demand.

The 1 per cent minimum turnover tax had previously applied to most businesses and companies, subject to sector-specific exceptions. Business leaders had repeatedly argued that the system disproportionately punished firms with thin profit margins, as the tax remained payable even when a business recorded little or no profit.

The latest decision follows sustained policy advocacy by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and the Dhaka Chamber of Commerce and Industry (DCCI), which had pressed the government to reduce what they described as an excessive minimum tax burden introduced through recent budgets.

An NBR official said the exemption was introduced to reduce the tax burden on small businesses and provide greater financial relief, particularly to enterprises operating with limited margins.

The reform, however, does not cover all sectors uniformly. Higher turnover-tax rates will remain in force for several specialised industries.
Manufacturers of cigarettes, bidis and other tobacco products will continue to pay turnover tax at 3 per cent, while manufacturers of carbonated beverages and sweets will face a rate of 2.5 per cent. Mobile phone operators will remain subject to a 1.5 per cent turnover tax.

Industrial establishments also enjoy a separate concession, allowing them to pay turnover tax at just 0.2 per cent instead of 1 per cent during the first three years after commencing commercial production.

The latest NBR move therefore represents a significant recalibration of Bangladesh’s turnover-tax regime, shifting the burden away from the smallest businesses while retaining the 1 per cent rate for larger general-category enterprises.

For small businesses, the change could be particularly significant: turnover will no longer automatically trigger a minimum tax bill of 1 per cent when annual sales remain within Tk 2 crore, giving loss-making and low-margin enterprises greater room to survive, reinvest and expand.