Two leading business chambers yesterday demanded the cancellation of a Tk 36 lakh cap on cash expenses to qualify for lower corporate tax rates, calling the requirement impractical.

In an economy where a large portion of transactions take place outside the banking system -- particularly in the informal sector -- such restrictions create barriers for businesses seeking tax benefits, they said.

"Although corporate tax rates have been gradually reduced in recent fiscal years, the conditions on cash transactions mean no company is able to fully utilise these benefits," said Kamran T Rahman, president of the Metropolitan Chamber of Commerce and Industry (MCCI).

He made the comments while presenting the MCCI's tax-related proposals at a pre-budget discussion at the National Board of Revenue (NBR) headquarters in the capital's Agargaon.

The NBR organised the discussion as part of its exercise to consult business chambers, professional bodies, and economists, and seek proposals on tax measures for the fiscal year 2025-26.

To encourage compliance with a condition promoting cashless transactions, the tax authority is offering a 2.5 percentage point tax reduction to listed and non-listed companies, except for banks, financial institutions, mobile phone operators, and tobacco companies, for the current fiscal year.

However, it provided the condition that all income, receipts, and single transactions exceeding Tk 5 lakh, and all annual expenses and investments over Tk 36 lakh, must be conducted through bank transfers.

Rahman said Bangladesh's economy is 80 percent informal, where banking dependency is not absolute. "Therefore, complying with these conditions is extremely challenging for large and medium-sized companies," he added.

The Foreign Investors' Chamber of Commerce and Industry (FICCI) expressed a similar view.

"A 100 percent cashless revenue system and the Tk 36 lakh limit for cash expenses are impractical in the country," FICCI said at the same event.

"Cashless transactions should be introduced gradually."

The MCCI also urged the NBR to set a separate tax rate for small and medium enterprises (SMEs) and reduce the turnover tax to safeguard them.

The FICCI emphasised the importance of collaboration with the NBR to create a more integrated tax system that streamlines revenue collection processes and enhances the effectiveness of internal revenue mobilisation efforts.

It recommended recognising and establishing a clear distinction between policy formulation and revenue collection.

The chamber proposed setting up a dedicated data and analytics team within the NBR to facilitate this shift, enabling more effective tax collection and compliance.

Additionally, the FICCI recommended implementing a unified value-added tax (VAT) rate. This, it said, would simplify the VAT structure, reduce complexities for businesses, and ensure the tax system remains efficient and equitable.

At the event, NBR Chairman Abdur Rahman Khan said his office would consider the proposals, keeping in mind the revenue implications.

Among others, Zaved Akhtar, president of FICCI, Habibullah N Karim, senior vice-president of the MCCI, and Simeen Rahman, vice-president of the MCCI, were present.