Governments across the world frequently struggle with basic arithmetic, but Bangladesh’s budget for the 2026-27 fiscal year introduces a more profound philosophical conundrum: how does a citizen pay tax on money they have not yet received?
This is the central flaw of a cascading new tax structure that penalises transaction volumes, levies charges on unearned income, and quietly introduces an inheritance tax through the backdoor.
The primary victims of this fiscal engineering will not be wealthy tycoons or land barons, but the urban middle class, for whom buying an apartment is a lifetime's definitive financial milestone. By attempting to expand its revenues, the state is poised to choke the sector underpinning urban growth and millions of livelihoods.
At the core it is the government’s treatment of joint development agreements, the ubiquitous model that powers urban housing in Bangladesh. Under the new rules, landowners who partner with developers must pay a 15% capital gains tax on the economic benefits they receive, including signing bonuses, rental compensation, and constructed apartments.
Crucially, this liability triggers the moment the completed property is transferred, irrespective of whether any cash has changed hands. Consider a typical arrangement: a landowner provides a ten-katha plot and receives twelve apartments valued at 12 crore taka.
If the land was purchased decades ago for a nominal sum, the paper gain is enormous, generating an immediate tax bill of over one crore taka. Because the transaction yields bricks and mortar rather than liquid cash, the owner must either borrow heavily or immediately liquidate a portion of the asset simply to satisfy the state.
Forcing asset liquidation at the moment of acquisition is an eccentricity that few rational tax codes would celebrate.
Worse still, the policy fragments a single economic exchange into multiple taxable events. A landowner receiving monthly rental compensation during construction will see that money taxed as annual income. When the building is complete, the 15% capital gains tax is levied on the handed-over apartments.
Should those apartments later be sold to actual buyers, a third layer of capital gains tax is applied to subsequent appreciation. This is triple taxation on a single underlying transaction.
The architecture also contradicts explicit assurances from the National Board of Revenue, which earlier this year promised that no inheritance tax was on the horizon.
Yet, when an individual inherits ancestral land and later enters a joint venture to redevelop it, the 15% capital gains tax is calculated against the original historical acquisition cost from decades prior.
To the taxpayer, the label matters little; a tax that expropriates a significant share of inherited family wealth based on historical paper valuation is an inheritance tax in all but name.
While institutional developers possess the resources to absorb these shocks, the middle class enjoys no such insulation. They will absorb the pain through three distinct channels. First, apartment prices are projected to rise by as much as 2,000 taka per square foot.
Landowners, aware of the fiscal penalty awaiting them at handover, will demand a larger share of the built area or higher baseline valuations, costs that developers will pass on to final buyers. Second, this tax arrives alongside a simultaneous increase in the cost of raw materials.
The budget elevates value-added tax on steel billets and rebar, which, compounded by rising electricity tariffs, threatens to drive up rod production costs by 12,000 taka per tonne. The aspiring buyer is caught in a pincer movement of state-induced inflation.
Third, the joint venture model itself will fracture under disputes over who bears the tax burden, stalling projects.
The collateral damage extends far beyond frustrated homebuyers. The housing market does not exist in a vacuum; it is intricately bound to 269 linked industries, ranging from cement and logistics to ceramics and paint.
A prolonged freeze in residential construction puts nearly five million jobs at risk, primarily affecting vulnerable working-class laborers such as masons, electricians, and transport workers. Over the past six years, cumulative input costs for aluminum, steel, and labor have already surged by nearly 60%, leaving the sector with practically zero margin to cushion additional shocks.
Ultimately, the state’s fiscal arithmetic is self-defeating, illustrating the Laffer curve. Since the political transition of July-August 2024, apartment sales across all but the largest developers have plummeted by nearly half. Imposing a punitive 15% levy on a severely depressed market will not yield a windfall.
Instead, it will suppress transactions, lower property registrations, and shrink the aggregate tax base. The government has succumbed to the classic bureaucratic delusion that raising tax rates is synonymous with raising tax revenue.
True fiscal reform requires widening the tax net to capture untaxed sectors. Repeatedly drilling into a single, highly transparent transaction is not expansion; it is predatory extraction.
For Bangladesh's middle class, the budget offers an unwelcome lesson: a home is no longer a sanctuary, but a triply taxed luxury.
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Adil Mahmood is a former journalist and a public policy observer