Meeting with NBR Chairman - Key Sectoral Issues Raised

On April 8, 2025, we had the opportunity to meet with Mr. Md Abdur Rahman Khan,

FCMA, Chairman of the National Board of Revenue (NBR), at Rajashwa Bhaban,

Agargaon, to discuss critical issues facing Microfinance Institutions (MFIs).

During the meeting, a memorandum was also handed over to the Chairman, outlining

key sectoral concerns and recommendations aimed at ensuring a more enabling fiscal

environment for the microfinance sector. The following points were addressed:

1. Tax Exemption on Microcredit Loan Interest:

Interest earned from microcredit loans is exempt from tax under the Sixth

Schedule of the Tax Law, 2023. However, the Finance Act 2024 introduced a new

clause (‘kha’) that seems to contradict the fundamental principles of microcredit

operations. We respectfully request that this amendment be either removed or

further clarified.

2. Approval Requirements for Fund Utilization:

NGOs receiving foreign donations are required to obtain approval from the NGO

Affairs Bureau. Similarly, the utilization of surplus funds from microcredit

operations requires approval from the MRA. The additional requirement for

approval from the NBR (Section 2, Sl. 43) creates procedural duplication and

raises concerns about inter-agency coordination and trust. We recommend that

this additional requirement be withdrawn.

3. VAT on Interest in Microfinance Operations:

According to an NBR order dated 03/08/2002, the banking sector is exempt from

VAT on loan interest and interest paid on customer savings. We propose that a

similar VAT exemption be extended to Microfinance Institutions (MFIs) and their

microcredit activities.

The Honorable Chairman of the NBR gave his full attention to the issues raised and

expressed agreement with all the points discussed. He also assured us that necessary

steps would be taken to review the respective acts. Led by our Honorable Chairman,

the meeting was attended by the following members of the Governing Body and

Advisory Council of INAFI Bangladesh:

1. Mr. Mohammad Muslim Chowdhury, Chairman

2. Mr. Md. Emranul Huq Chowdhury, Vice Chairman

3. Mr. Mosharraf Hossain, Treasurer

4. Mr. Md. Abdus Samad, Member

5. Mr. Aftabur Rahman Jafree, Member

6. Mr. Asif Saleh, Advisory Council Member

7. Mrs. Humaira Islam, PhD, Advisory Council Member

8. Mr. Shib Narayan Kairy, Advisory Council Member

9. Mr. Md. Ariful Haque Choudhury, Advisory Council Member

10. Mrs. Mahbuba Haque, Member Secretary

Attendees