The American Chamber of Commerce in Bangladesh (AmCham) has recommended waiving the mandatory submission of income tax return slips for credit card issuance up to Tk 5 lakh.

Currently, personal loans of up to Tk 5 lakh do not require a tax return, but credit cards do. Since credit cards are also a form of loan product, this policy appears contradictory, AmCham said.

Syed Mohammad Kamal, country manager for Bangladesh at Mastercard, said exempting tax return submission for credit card issuance up to Tk 5 lakh would boost credit card usage and enhance the traceability of financial transactions.

"This would help identify undeclared income, leading to higher taxable income and improved tax compliance," he said while presenting AmCham's tax-related proposals at a pre-budget discussion at the National Board of Revenue headquarters in the capital's Agargaon yesterday.

The NBR organised the discussion as part of its consultations with business chambers, professional bodies, and economists to gather tax proposals for the fiscal year 2025-26.

Syed Mohammad Kamal, Mastercard country manager, said exempting tax return submission for credit card issuance up to Tk 5 lakh would boost credit card use

AmCham also pointed out that offshore banking services in Bangladesh are taxed at the same rate as onshore banking services—40 percent.

"Other Asia-Pacific countries impose preferential tax rates of 0 to 20 percent on offshore banking units (OBUs)," it said.

OBUs primarily support exporters operating in export processing zones (EPZs) and facilitate competitiveness, Kamal said, adding that a lower tax rate for OBUs would help banks offer internationally competitive terms to foreign investors and encourage local exporters.

"A preferential tax rate for OBUs would attract more foreign direct investment, offer competitive terms to investors in EPZs, and boost local exports," he said.

AmCham further said cash transactions still dominate Bangladesh's economy as digital payments often incur additional VAT or tax.

"Unlike many countries that incentivise digital payments, Bangladesh has yet to introduce such measures," it said.

It recommended a 5 percent incentive on digital payments—3 percent for users and 2 percent for merchants—when transactions are made through cards, mobile financial services, or payment gateways.

"Encouraging digital payments will improve traceability, reduce tax evasion, and promote financial transparency," Kamal said.

Citing global examples, he noted that economies offering digital payment incentives have seen increased formal economic activities and financial inclusion.

Meanwhile, the Women Entrepreneurs Network for Development Association proposed increasing the annual tax-free income limit for women entrepreneurs from Tk 4 lakh to Tk 5 lakh.

The India-Bangladesh Chamber of Commerce and Industry called for verifying the value of imported goods within three months and conducting customs valuation based on the country of origin.

The Business Initiative Leading Development recommended making public the advisory committee's proposed reform to separate tax policy and tax collection authorities.