Overview of the FY2025-26 Budget Proposal
Each June, the Government of Bangladesh submits the budget for the next fiscal year, which runs from July to the following June. The FY2025-26 budget proposal, covering July 2025 to June 2026, was drafted against three major policy priorities: compliance with the IMF reform program, inflation control, and stronger domestic revenue mobilization. The total budget is approximately BDT 7.97 trillion, or about USD 68 billion, up 8% year on year, and the proposed changes to import duties and VAT are directly relevant to Korean exporters.
BDT 7.97T
Total Budget
Approx. $68B
6.5% target
GDP Growth
FY2025-26
Within 6.5%
Inflation
Policy target
BDT 4.8T
Revenue Goal
10% of GDP
BDT 2.65T
Development Spending
Including ADP
5.0% of GDP
Fiscal Deficit
Within IMF guidance
Tax Changes and Tariff Adjustments
Key Tariff and Tax Changes in FY2025-26
| Item | Previous | Revised | Implication |
|---|---|---|---|
| Corporate Tax (General) | 27.5% | 25% | Supports foreign investment attraction |
| VAT Registration Threshold | BDT 300,000/year | BDT 500,000/year | Eases compliance burden for small firms |
| Raw Material Tariffs | 5-10% | 1-5% | Lowers manufacturing input costs |
| Luxury Goods Tariffs | 25% | 25-45% | Restricts imports of selected cosmetics and electronics |
| IT Equipment Tariffs | 5-15% | 1-5% | Encourages digitalization |
| Capital Goods Tariffs | 1-5% | Unified at 1% | Promotes equipment investment |
| Minimum Tax | 0.6% | 0.5% | Reflects IMF recommendations |
01
Products Benefiting from Tariff Cuts
The FY2025-26 proposal lowers tariffs on several items that create opportunities for Korean exporters. These include: (1) IT equipment and semiconductors at 1-5%, such as servers, network devices, and semiconductor parts; (2) capital goods at a unified 1%, including textile machinery, industrial robots, and production equipment; (3) raw materials for medical devices at 1%, such as diagnostic device components and medical sensors; and (4) solar components at 0-1%, including cells, inverters, and panel frames. Demand for these categories is expected to expand alongside Bangladesh's industrial policy agenda.
02
Products Facing Higher Tariffs
The government also raised tariffs on selected finished goods to restrain imports. Finished cosmetics move from 25% to as high as 45%, directly affecting Korean K-beauty exports, although local production based on imported inputs would still benefit from raw-material tariff treatment around 5%. Some finished electronics rise from 25% to 35%, including home appliances and mobile accessories, while certain processed foods increase from 25% to 30%. Korean consumer brands should therefore assess local production or OEM options.
03
Changes in the VAT System
The VAT registration threshold rises from BDT 300,000 to BDT 500,000 in annual turnover, easing the burden on smaller distributors. Mandatory e-invoicing will apply from December 2025 to companies with annual sales above BDT 100 million and then expand to all VAT-registered firms from June 2026. This creates a potential export opportunity for Korean IT providers offering e-invoicing and tax digitalization solutions.
Investment Climate and Incentives
New or Strengthened Incentives
Economic Zones (EZ)10-year corporate tax holiday
IT/ITESTax exemption through 2032
Green InvestmentAccelerated depreciation + tax credits
Exporters50% corporate tax reduction
Key Investment Risks
Exchange RateFurther BDT weakness expected
Energy CostsPlanned gas and electricity tariff hikes
Profit RepatriationPossible LC delays for remittances
Political UncertaintyPost-election aftereffects since 2024
Macroeconomic Outlook
Bangladesh Macroeconomic Outlook
| Indicator | FY2024-25 | FY2025-26 Outlook | Note |
|---|---|---|---|
| GDP Growth | 5.8% | 6.5% | IMF projection: 6.0% |
| Inflation | 9.5% | 6.5% | Assumes food price stabilization |
| Exchange Rate (USD/BDT) | 118-122 | 120-130 | Weakening trend continues |
| Foreign Reserves | $20-22B | $22-25B | Supported by IMF inflows |
| RMG Exports | $43B | $47-50B | Assumes recovery in European demand |
| Imports | $65B | $70B+ | Higher demand for capital goods and inputs |
| FDI Inflows | $1.8B | $2.0-2.5B | Economic zones may help |
Budget Announcement
Submitted to parliament in June, ahead of the July fiscal year start
→↓
Review Tariffs and Taxes
Check item-by-item tariff revisions
→↓
Recalculate Pricing
Update export prices and margins
→↓
Adjust Contract Terms
Renegotiate pricing with buyers if needed
→↓
Check Incentives
Assess use of EZ and IT tax exemptions
→↓
Set Strategy
Decide on local production or investment plans
Bangladesh Certification Report for Fire Extinguishers (HS 842410)Review item-level tariff and certification requirements
Tariff Response 119 FAQ: Part 3 HS Code and Customs ValuationCheck practical FAQ guidance on HS codes and customs valuation
Overall, the FY2025-26 budget shows a dual-track approach: lower tariffs on capital goods and IT equipment, but higher tariffs on selected finished consumer products. Korean exporters are therefore likely to find stronger opportunities in machinery, components, and industrial inputs, while consumer-facing sectors such as cosmetics and electronics should review local manufacturing options. Because the IMF-backed drive for stronger revenue collection is expected to continue, ongoing monitoring of tariff and VAT changes will remain essential.
bangladesh-budgetFY2025-26economic-policytariff-changesinvestment-climate
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