The Bangladesh government, under the leadership of Prime Minister Tarique Rahman, has moved to radically restructure the nation’s transport economy through a dual-track fiscal strategy. In a series of high-level decisions ahead of the 2026–27 national budget, the administration has paired a new tax regime for millions of small vehicles with aggressive duty waivers designed to accelerate the adoption of heavy electric transport.
During a Cabinet meeting held at the National Parliament, the government approved a significant tax relief package for the import of brand-new electric vehicles. Chaired by the Prime Minister, the Cabinet resolved to maintain a flat 15 per cent Value Added Tax (VAT) on electric buses with a minimum of 17 seats, while simultaneously granting full exemptions from customs duty, regulatory duty, supplementary duty, and advance income tax.
A historic leap for green energy
The crown jewel of the new policy is a massive push toward electric mobility. To transform Dhaka into a cleaner, quieter city, the Cabinet has approved a total waiver of import duties for brand-new electric buses and heavy trucks.
This initiative makes it significantly cheaper for schools and logistics companies to switch to modern, zero-emission vehicles. While a standard 15 per cent VAT remains, the removal of customs and advance taxes ensures that the “green revolution” is financially within reach for the private sector, paving the way for a healthier, smog-free future.
Modernising the roadway for all
In an effort to improve road safety and create a more transparent transport economy, the government is introducing a structured registration and Advance Income Tax (AIT) system. This move is designed to ensure that every vehicle on the road is officially recognised, contributing to better infrastructure and smoother traffic management.
For motorcycle owners, the government has thoughtfully protected low-income riders by keeping entry-level bikes tax-free. Higher-capacity motorcycles will contribute to national development through a fair, tiered system based on engine capacity:
Up to 110cc: Tax-Free (Protecting daily commuters)
111cc to 125cc: Tk 2,000 annually
126cc to 165cc: Tk 5,000 annually
Above 165cc: Tk 10,000 annually
With nearly 48.7 lakh motorcycles now being formalised, the projected Tk 1,520 crore in annual revenue will be a vital engine for building safer highways and bridges across the country.
Safety first for auto-rickshaws
The government is also giving a formal identity to the estimated 50 lakh battery-powered auto-rickshaws. Through the “Electric Three-Wheeler Management Policy 2025", these drivers will gain official registration and fitness certificates—moving them from the “shadow” economy into a safe, regulated sector. The annual fees are designed to be affordable and fair, based on where they serve the community:
City Corporation Areas: Tk 5,000
Municipalities: Tk 2,000
Union Level (Rural): Tk 1,000
Economic balancing act
This policy shift represents a delicate tightrope walk for the administration. By taxing motorcycles and rickshaws, the government is tapping into a massive, previously invisible revenue stream that can fund infrastructure. However, economists warn that for the average citizen—many of whom earn between Tk 20,000 and Tk 40,000 a month—an extra annual tax of several thousand Taka is a significant burden.
Furthermore, industry insiders from major manufacturers suggest that the new levies could slow down the rapid growth of the local motorcycle assembly industry. The challenge for the government in 2026 will be ensuring that the drive for revenue doesn’t stall the very mobility that keeps the economy moving.
