Publish: 13:52, 08 Jan, 2025 Updated: 14:34, 08 Jan, 2025

Higher VAT to add pressure on industries

Online Desk
Higher VAT to add pressure on industries

The interim government’s decision to increase VAT on 65 items—including medicine, powdered milk, biscuits, juice, fruits, soap, and sweets—midway through the 2024–25 fiscal year has sparked outrage among businessmen.

Stakeholders expressed frustration over the lack of prior consultation, warning that the move will not only reduce purchasing power but also place additional strain on industries.

However, the government made the decision coming under the pressure of International Monetary Fund’s (IMF) pressure.

As part of efforts to boost revenue, the government plans to raise VAT and other taxes, including supplementary duties. The proposed Value Added Tax and Supplementary Duty (Amendment) Ordinance 2025 was approved in principle at a council meeting last Wednesday.

VAT on products and services like ready-made garments, sweets, air-conditioned restaurants, and non-AC hotels may increase to 15%. The restaurant industry is particularly worried, as VAT on food bills in air-conditioned restaurants is set to rise from 5% to 15%.

Imran Hasan, Secretary General of the Bangladesh Restaurant Owners Association, said, “Restaurant owners are deeply concerned. A threefold increase in VAT will have a devastating impact on our businesses. Along with VAT, income tax will also rise, disproportionately affecting those who comply with all regulations. It seems businesses are being pushed to the brink under IMF's directives.”

Similarly, VAT on ready-made garments may increase from 7.5% to 15%, further driving up clothing prices. The same applies to sweets, where VAT is set to double.

Azharul Haque Azad, President of the Bangladesh Fashion Entrepreneurs Association (FEAB), criticized the move, stating, “The losses incurred in July and August have not yet been recovered. Increasing VAT rates will stifle businesses further. Instead of raising rates, the National Board of Revenue (NBR) should focus on expanding VAT coverage.”

Former President of the Bangladesh Sweet Manufacturers Association, Madhab Chandra Ghosh, noted, “Decisions of this magnitude should involve prior discussions with businesses. Lowering VAT rates in the past increased compliance and collections. Higher rates discourage both producers and consumers.”

The 15% VAT hike will also impact the production of biscuits, pickles, mosquito coils, mattresses, transformers, and tissue paper. Air travel costs may increase due to proposed excise duty hikes. VAT on services like obtaining driving licenses may also rise to 15%.

Moreover, businesses with an annual turnover of Tk3 million to Tk5 million will now face turnover taxes, whereas previously, the threshold began at Tk5 million. Any business with annual sales exceeding Tk5 million will have to pay 15% VAT on goods and services.

Dr. Mustafizur Rahman, Distinguished Fellow at the Center for Policy Dialogue (CPD), remarked, “The mid-year VAT increase was forced by circumstances, but it will create significant pressure on both consumers and producers in an already high-inflation environment. While raising taxes on luxury items like alcohol and cigarettes is reasonable, increasing VAT on goods commonly used by lower-middle-income groups will intensify the burden.

“We should explore ways to increase direct tax coverage while reducing indirect taxes, which disproportionately impact all segments of society,” he added.

Courtesy: The Daily Sun

Bd-Pratidin English/ AM

More News
RMG workers protest in Gazipur demanding unpaid dues, Eid bonus
RMG workers protest in Gazipur demanding unpaid dues, Eid bonus
BEZA invites foreign investment in ambitious NSEZ project in Ctg
BEZA invites foreign investment in ambitious NSEZ project in Ctg
'Govt creating ecosystem to make business operations much easier'
'Govt creating ecosystem to make business operations much easier'
Prof. Yunus urges Trump to postpone tariffs on Bangladeshi exports
Prof. Yunus urges Trump to postpone tariffs on Bangladeshi exports
Exports witness 11.44% growth in March
Exports witness 11.44% growth in March
Country's economy expands in March, PMI reaches 61.7
Country's economy expands in March, PMI reaches 61.7
BB triggers Tk 9 billion startup fund for new entrepreneurs
BB triggers Tk 9 billion startup fund for new entrepreneurs
Trading opens with gains at Dhaka, Chattogram stock exchanges
Trading opens with gains at Dhaka, Chattogram stock exchanges
Vessel carrying 12,700 MT rice arrives at Ctg port from Vietnam
Vessel carrying 12,700 MT rice arrives at Ctg port from Vietnam
Stocks plunge as markets anticipate rapid US rate cuts
Stocks plunge as markets anticipate rapid US rate cuts
Bangladesh opens 4-day summit to boost direct foreign investment
Bangladesh opens 4-day summit to boost direct foreign investment
Islami Bank MD sent on mandatory leave
Islami Bank MD sent on mandatory leave
Latest News
Palestinian ambassador thanks Bangladeshis for protests
Palestinian ambassador thanks Bangladeshis for protests
4 hours ago | National
No need to panic over suspension of export orders: Press Secretary
No need to panic over suspension of export orders: Press Secretary
5 hours ago | National
Honey harvesting begins in Sundarbans' Satkhira range
Honey harvesting begins in Sundarbans' Satkhira range
5 hours ago | City
RMG workers protest in Gazipur demanding unpaid dues, Eid bonus
RMG workers protest in Gazipur demanding unpaid dues, Eid bonus
6 hours ago | Business
Philippine envoy meets Chief Adviser
Philippine envoy meets Chief Adviser
6 hours ago | National
Miraz shortlisted for best sportsperson of the year
Miraz shortlisted for best sportsperson of the year
6 hours ago | Sports
US citizens in Dhaka warned of travel risks
US citizens in Dhaka warned of travel risks
6 hours ago | National
Daffodil University suspends lecturer for opposing student solidarity strike for Gaza
Daffodil University suspends lecturer for opposing student solidarity strike for Gaza
6 hours ago | National
‘Swadhinata Concert’ rescheduled in solidarity with protest against Israeli genocide
‘Swadhinata Concert’ rescheduled in solidarity with protest against Israeli genocide
7 hours ago | National
I strongly oppose any displacement, annexation in Gaza, West Bank: Macron
I strongly oppose any displacement, annexation in Gaza, West Bank: Macron
7 hours ago | International
11 jailed, including 7 ex-Sonali Bank officials, for Tk 1.38 crore embezzlement
11 jailed, including 7 ex-Sonali Bank officials, for Tk 1.38 crore embezzlement
7 hours ago | National
Ukraine to send delegation to US next week for talks on new mineral deal
Ukraine to send delegation to US next week for talks on new mineral deal
7 hours ago | International
BEZA invites foreign investment in ambitious NSEZ project in Ctg
BEZA invites foreign investment in ambitious NSEZ project in Ctg
7 hours ago | Business
'Redrawing the map, climate change threatens national security'
'Redrawing the map, climate change threatens national security'
8 hours ago | National
34% of Americans trust ChatGPT—But not for legal or medical advice
34% of Americans trust ChatGPT—But not for legal or medical advice
8 hours ago | Tech
'Govt creating ecosystem to make business operations much easier'
'Govt creating ecosystem to make business operations much easier'
8 hours ago | Business
Prof. Yunus urges Trump to postpone tariffs on Bangladeshi exports
Prof. Yunus urges Trump to postpone tariffs on Bangladeshi exports
8 hours ago | Business
Brook named new England white-ball cricket captain
Brook named new England white-ball cricket captain
8 hours ago | Sports
249 killed in 11 days of Eid road accidents across Bangladesh: RSF
249 killed in 11 days of Eid road accidents across Bangladesh: RSF
9 hours ago | National
The Attraction and Potential Hazards of AI Lovers
The Attraction and Potential Hazards of AI Lovers
9 hours ago | Lifestyle
Consensus Commission aims for national reform agreement by mid-July
Consensus Commission aims for national reform agreement by mid-July
9 hours ago | National
Bangladesh strongly condemns attacks on Gaza, calls for ceasing military operations
Bangladesh strongly condemns attacks on Gaza, calls for ceasing military operations
9 hours ago | National
Exports witness 11.44% growth in March
Exports witness 11.44% growth in March
10 hours ago | Business
Trump says he’s not backing down on tariffs
Trump says he’s not backing down on tariffs
10 hours ago | International
Policeman dispersed protesters without charging baton to get President’s medal
Policeman dispersed protesters without charging baton to get President’s medal
10 hours ago | National
Babar Ali conquers Annapurna-1 as first Bangladeshi
Babar Ali conquers Annapurna-1 as first Bangladeshi
10 hours ago | National
King Charles III shrugs off health scare to begin Italy visit
King Charles III shrugs off health scare to begin Italy visit
10 hours ago | International
Bandarban Court sends ARSA chief Ataullah to jail after bail rejection
Bandarban Court sends ARSA chief Ataullah to jail after bail rejection
10 hours ago | National
China vows 'stable' relations with S. Korea after Yoon impeachment
China vows 'stable' relations with S. Korea after Yoon impeachment
10 hours ago | International
Nasir impresses with the ball on competitive comeback after ICC ban
Nasir impresses with the ball on competitive comeback after ICC ban
11 hours ago | Sports
Most Read
Uncertainty surrounds around 800 million in Bangladeshi shipments
Uncertainty surrounds around 800 million in Bangladeshi shipments
16 hours ago | Special
BB triggers Tk 9 billion startup fund for new entrepreneurs
BB triggers Tk 9 billion startup fund for new entrepreneurs
12 hours ago | Business
249 killed in 11 days of Eid road accidents across Bangladesh: RSF
249 killed in 11 days of Eid road accidents across Bangladesh: RSF
8 hours ago | National
Bangladesh Hockey team finalizes squad for AHF Cup
Bangladesh Hockey team finalizes squad for AHF Cup
18 hours ago | Sports
‘Swadhinata Concert’ with leading musicians in four cities on Friday
‘Swadhinata Concert’ with leading musicians in four cities on Friday
18 hours ago | Entertainment
10 healthy drinks to start your day
10 healthy drinks to start your day
13 hours ago | Lifestyle
Dollars costlier despite ample reserves
Dollars costlier despite ample reserves
16 hours ago | Special
‘A Minecraft Movie’ gives Hollywood major box office boost
‘A Minecraft Movie’ gives Hollywood major box office boost
16 hours ago | Entertainment
Bangladesh erupts in protests against Israeli massacre in Gaza
Bangladesh erupts in protests against Israeli massacre in Gaza
14 hours ago | National
Fingerprint not working
Fingerprint not working
15 hours ago | Special
Country's economy expands in March, PMI reaches 61.7
Country's economy expands in March, PMI reaches 61.7
12 hours ago | Business
Vessel carrying 12,700 MT rice arrives at Ctg port from Vietnam
Vessel carrying 12,700 MT rice arrives at Ctg port from Vietnam
14 hours ago | Business
Trading opens with gains at Dhaka, Chattogram stock exchanges
Trading opens with gains at Dhaka, Chattogram stock exchanges
13 hours ago | Business
Bangladesh opens 4-day summit to boost direct foreign investment
Bangladesh opens 4-day summit to boost direct foreign investment
15 hours ago | Business
Protect your hair this summer from beach water
Protect your hair this summer from beach water
14 hours ago | Lifestyle
Mild heat wave sweeps over nine districts: Met office
Mild heat wave sweeps over nine districts: Met office
14 hours ago | National
Harvard study reveals 17 risk factors for brain diseases
Harvard study reveals 17 risk factors for brain diseases
13 hours ago | Lifestyle
Dhaka's dwellers breathe "moderate" air quality today
Dhaka's dwellers breathe "moderate" air quality today
16 hours ago | City
Bangladesh strongly condemns attacks on Gaza, calls for ceasing military operations
Bangladesh strongly condemns attacks on Gaza, calls for ceasing military operations
9 hours ago | National
July uprising creates atmosphere for free assembly
July uprising creates atmosphere for free assembly
19 hours ago | National
Daffodil University suspends lecturer for opposing student solidarity strike for Gaza
Daffodil University suspends lecturer for opposing student solidarity strike for Gaza
6 hours ago | National
“Israel's genocide and occupation in Gaza must end immediately.”
“Israel's genocide and occupation in Gaza must end immediately.”
14 hours ago | City
World Health Day today
World Health Day today
16 hours ago | Lifestyle
Babar Ali conquers Annapurna-1 as first Bangladeshi
Babar Ali conquers Annapurna-1 as first Bangladeshi
10 hours ago | National
Policeman dispersed protesters without charging baton to get President’s medal
Policeman dispersed protesters without charging baton to get President’s medal
10 hours ago | National
Prof. Yunus urges Trump to postpone tariffs on Bangladeshi exports
Prof. Yunus urges Trump to postpone tariffs on Bangladeshi exports
8 hours ago | Business
Bandarban Court sends ARSA chief Ataullah to jail after bail rejection
Bandarban Court sends ARSA chief Ataullah to jail after bail rejection
10 hours ago | National
Israeli forces raid cities, refugee camps in West Bank
Israeli forces raid cities, refugee camps in West Bank
18 hours ago | International
Trump says he’s not backing down on tariffs
Trump says he’s not backing down on tariffs
10 hours ago | International
'Redrawing the map, climate change threatens national security'
'Redrawing the map, climate change threatens national security'
8 hours ago | National