Bangladesh's economy continues to demonstrate resilience despite global and domestic challenges, with strong remittance inflows and steady growth in the services sector providing key support, according to the latest Asian Development Outlook (ADO) July 2026 released by the Asian Development Bank (ADB).

The ADB projected Bangladesh's gross domestic product (GDP) to grow by 3.7 per cent in fiscal year (FY) 2026 and 4.5 percent in FY2027, noting that sustained reforms and improving macroeconomic conditions are expected to strengthen the country's growth momentum, said a ADB press release issued on Thursday (July 9).

"Bangladesh's economy continues to show resilience amid a difficult global and domestic environment, supported by strong remittance inflows and steady services activity," said Akira Matsunaga, Officer-in-Charge for ADB's Bangladesh Resident Mission. 

"Sustained reforms to strengthen macroeconomic stability, improve the investment climate, enhance financial sector governance, and address energy and infrastructure constraints will be critical to supporting a stronger and more inclusive recovery. These reforms will also be important to crowd in private investment, create quality jobs, and strengthen economic resilience," he added.

According to the report, growth in FY2026 will be underpinned by robust remittance inflows, steady expansion of the services sector and targeted credit support for priority sectors despite a tight macro-financial environment.

The report said inflation is projected at 9.0 per cent in FY2026 and is expected to ease gradually to 8.8 percent in FY2027 as economic conditions improve.

ADB said moderate inflation, simplified business regulations, improved governance, tax administration reforms and continued remittance incentives are expected to strengthen private consumption and investment in FY2027.

The report noted that the services sector will continue to support economic activity, while ongoing reforms are expected to improve the business climate and boost investor confidence over the medium term.

ADB also emphasized that continued policy reforms and prudent macroeconomic management would be crucial to sustaining growth, enhancing competitiveness and strengthening Bangladesh's resilience against external shocks, the release added.

END/ASA

Companies and organisations will be required to file tax returns on the income generated by employee welfare funds from the current fiscal year and pay a 27.5 percent tax on the earnings. 

The Income Tax Act 2023 incorporates the provision, lifting the tax exemption and amnesty on the compulsion to file returns for funds such as provident funds, gratuity funds and workers' profit participation funds maintained by the private sector.

The law, however, has exempted government-managed provident funds from taxation, raising questions.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce & Industry, said there were many other avenues to collect tax.

"Employees benefit from provident funds after their retirement. So, the authority should not slap taxes on retirement benefit."

He said while levying the tax, the government has not treated provident funds of the private and public sectors equally.

"It is discriminatory," he said, adding that they would appeal to the tax authority for the withdrawal of the tax on income from provident funds.

Debabrata Roy Chowdhury, director for legal, regulatory and corporate affairs at Nestlé Bangladesh PLC, said the introduction of income tax on trust funds would lower the overall income from such schemes.

"This will have an adverse long-term impact on retired employees of private organisations."

Chowdhury urged the authority to address the issue in line with the spirit of the government's initiatives aimed at ensuring social security for private sector employees.

"The recent introduction of the universal pension scheme for private sector employees is a good example of that."

A senior official of the NBR, on condition of anonymity, said the income of government-managed provident funds was exempted in line with the Provident Fund Act 1925.

He said provident funds under the private sector had been historically exempted and there was no requirement to submit tax returns. As a result, it was unclear whether the funds were properly utilised.

"From now onwards, we will see proper disclosure."

The tax official said the contribution of payroll tax is about 3 percent of the total income tax although it should increase as the economy is growing.

Md Shahadat Hossain, a former president of the Institute of Chartered Accountants of Bangladesh, said income from investment in savings certificates, where people invest as a source of future earnings, is already taxed.

"From that perspective, the imposition of tax on provident and other employee welfare funds seems okay."

However, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said social protection for private sector employees was low.

"Provident and other workers' welfare-related funds provide little social protection. The imposition of tax will increase inequality. But there can't be any discrimination in taxation between private and government provident funds."

Khan, citing the latest income tax law that replaced the Income Tax Ordinance 1984, said the NBR tried to find new avenues to increase tax collection and improve the nation's revenue-gross domestic product ratio, which is one of the lowest in the world.

"We can see the desperation of the tax authority to boost collection. This ultimately reveals the inability of the NBR to catch the tax evaders and illicit money makers."