The Dhaka Chamber of Commerce and Industry (DCCI) yesterday recommended setting a uniform single-digit value-added tax (VAT) rate and raising the tax-free income limit to Tk 5 lakh.

The proposals were placed during a pre-budget meeting for the fiscal year 2025-26 with National Board of Revenue (NBR) Chairman Abdur Rahman Khan at the NBR office in Agargaon, Dhaka.

Currently, the standard VAT rate is 15 percent across the board, but it has been segregated into different slabs, such as 10 percent, 7.5 percent, and 5 percent, in different sectors.

"These various slabs are actually causing difficulties for traders as well as disputes in many cases," said DCCI President Taskeen Ahmed.

"Many traders are forced to bear the burden of additional tax due to the non-availability of input tax rebate benefits," he said.

Besides, the DCCI proposed setting a nominal 1 percent VAT for traders in the informal sector in the next budget.

"It would bring transparency to overall revenue management, reduce the cost of doing business, and have a positive impact on the manufacturing sector," said Ahmed.

The DCCI also proposed setting a nominal 1 percent VAT for traders in the informal sector in the next budget

Furthermore, the DCCI president also urged the government to raise the tax-free income limit for individuals from Tk 3.50 lakh to Tk 5 lakh.

Earlier, the Centre for Policy Dialogue had suggested increasing the tax-free income threshold to Tk 4 lakh.

In this regard, Ahmed requested that the prevailing inflationary situation and its burden on the masses be considered.

During the meeting, the DCCI proposed raising the second tax slab threshold from Tk 1 lakh to Tk 3 lakh while maintaining the current 5 percent tax rate for that range.

The trade body also called for reducing the highest income tax rate from 30 percent to 25 percent for the top income slab.

In addition, the DCCI president proposed a gradual reduction of advance tax at the import level for commercial endeavours and the gradual phasing out of the existing advance tax on manufacturers at the import level.

Traders have to pay more customs duty than the actual import price due to the difference between the tariff value set by the customs authority and the market price, he said.

This is increasing business costs as well as making the import process complicated and expensive, said Ahmed.

DCCI Senior Vice President Razeev H Chowdhury and Vice President Md Salem Sulaiman were also present.

In another meeting, the Anti-Tobacco Media Alliance (ATMA) proposed merging the low and medium price tiers of cigarettes and reducing the number of price tiers to three. Currently, there are four price tiers—low, medium, high, and premium—for cigarettes. This has rendered tobacco price and tax measures less effective, stated the ATMA.

Particularly, the very narrow price difference between low and medium-tier cigarettes allows consumers to choose brands belonging to either of these two tiers, it said.

To safeguard public health, this loophole can be addressed by merging the low and medium price tiers and reducing the number of price tiers to three, said the platform.