Impact of Tax Incentives on Tax Revenue, GDP, and Foreign Direct Investment: A Study on the Bangladesh Economy

Authors

DOI:

https://doi.org/10.18533/nxtb3r31

Keywords:

Tax incentives, Tax revenue, Foreign Direct Investment (FDI), Economic growth, Industrial development

Abstract

Background: Tax incentives play a significant role in fostering investment, industrial growth, and job creation. The study examines their impact on Bangladesh’s economic growth, highlighting the facilities and major drawbacks for sustainable growth. 

Purpose: This study aims to investigate the impact of tax incentives on tax revenue, economic growth, and foreign direct investment in Bangladesh, utilizing the Neoclassical Growth Model.

Methodology: The study collected data from secondary sources. The collected data cover a period of 10 years from 2014 to 2023. The data was analyzed to test the relationship between independent variables of tax revenue, economic growth, and foreign direct investment and the dependent variable of tax incentives.

Findings: The result of tax revenue is positive and insignificantly associated with tax incentives. Additionally, GDP is positive and significantly influenced by tax incentives. On the other hand, FDI inflows are negative and insignificantly associated with tax incentives.

Implications: The study's findings will help the government and policymakers serve the interests of investors, including both foreign and local, and understand how they benefit from tax incentives.  

Author Biographies

  • Dr. Saifuddin Khan, ACCA, Associate Professor, Accounting and Information Systems, University of Rajshahi

    Associate Professor

    Department of Accounting and Information Systems

    University of Rajshahi, Bangladesh

  • Rumel Ahmed , Accounting and Information Systems, University of Rajshahi

    Research Student

    Department of Accounting and Information Systems

  • Sajib Hossain Aoyan , Accounting and Information Systems, University of Rajshahi

    Research Student

    Department of Accounting and Information Systems

  • Md. Akhirul Islam

    Lecturer

    Department of Accounting

    Haji Lalmia City College, Gopalganj, Bangladesh

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Published

2025-10-07

Issue

Vol. 10 No. 03 (2025): October (Ongoing)

Section

Articles

License

Copyright (c) 2025 Dr. Saifuddin Khan, ACCA, Rumel Ahmed , Sajib Hossain Aoyan , Md. Akhirul Islam

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