The government has proposed a Tk500 crore fund for artificial intelligence (AI) and startup development alongside tax exemptions and reduced turnover tax for early-stage technology firms in the FY2026–27 budget.
Finance Minister Amir Khasru Mahmud Chowdhury announced the measures in parliament on Thursday, saying the government aims to position Bangladesh as an innovation-led economy driven by AI, digital entrepreneurship and youth-led ventures.
Tk500cr AI and startup fund
The proposed allocation includes Tk500 crore to support startups, women entrepreneurs, youth-led ventures and AI-based innovation. The fund will be used to encourage technology-driven business development and expand the country’s digital economy.
“The government has embraced artificial intelligence as a major opportunity for development and modernization,” the finance minister said in his budget speech.
VAT and tax relief for startups
The budget proposes full exemption from 15% VAT for startups at the local level, along with waivers on office rentals and imported services used in operations. The benefits would remain in place until June 30, 2035.
Officials said the measures are designed to lower operating costs and support early-stage firms struggling with funding and scale.
Lower turnover tax for tech firms
The minimum turnover tax for new technology startups would be reduced to 0.1% to ease financial pressure in the initial growth phase and allow greater reinvestment in expansion and product development.
AI in governance and public services
The government plans to integrate AI into public administration, smart city development and citizen services to improve efficiency and decision-making. AI systems will also be used in data centers to support government planning.
The budget also proposes introducing AI tools in the education sector to prepare students for future technology-driven jobs.
Duty relief and financing support
Customs duty and VAT concessions are proposed for selected IT hardware and networking equipment imports used in software development, cloud services, data centres and AI ventures.
The government also plans to expand financing access for freelancers through bank lending based on smart ID verification. Increased allocations are expected for Startup Bangladesh and similar state-backed innovation funds.
Industry response
Technology experts and entrepreneurs said the impact of the measures will depend on transparent implementation, improved access to finance, skills development and stronger data protection frameworks.
