Pandemic-hit restaurant sector wants VAT cut

Highlights:

Restaurateurs' demand for FY22 budget

• Cancellation of 10% supplementary duty on food items
• Maximum 3-5% VAT for lower, moderate categories of restaurants
• Preventing harassment of EFD user restaurants
• Maximum 10% commission for online delivery services
• Vaccination of restaurant staff within September this year

Restaurateurs' miseries amid pandemic

• Current sales have dropped to 15-20% compared to pre-pandemic period
• 30% restaurants have permanently shut down

The restaurant sector, which has severely been affected by the Covid-19 pandemic, has demanded a VAT reduction for moderate, lower categories of restaurants in the proposed budget for FY22.

The restaurateurs raised a seven-point demand, including a cancellation of 10% supplementary duty on some food items like pizzas, burgers, etc, at a press conference organised by the Bangladesh Restaurant Owners Association (Broa) on Saturday. 

"The finance minister has proposed a 15% VAT for air-conditioned and 5% for non- air-conditioned restaurants. Earlier, non-air-conditioned restaurants had to pay 7.5% VAT. We demand a maximum of 3-5% VAT for lower and moderate category restaurants and street food, and a 7.5% Vat for fine dining restaurants," Imran Hasan, secretary general of Broa, said at the event organised to express restaurateurs' opinions on the proposed budget and various issues faced by the sector.

"The air-conditioned and non-air-conditioned category for restaurants should be abolished for VAT payment as air-conditioning is a general necessity," Hasan added.

Broa proposed a 15% VAT for five-star and four-star hotels and restaurants and 2% VAT for canteens or cafeterias of educational institutions, hostels and industrial factories.  

The VAT on restaurants' rent can be fixed at a maximum of 3%, the association leader said.

The restaurateurs also demanded Tk10 lakh to Tk1 crore loans with 4% interest from the stimulus package for the SME sector.

They also demanded that the government declare the sector an industry and ensure vaccination for staff within September this year.       

EFD user restaurants facing harassment:

The restaurant owners claimed that they are facing harassment by a third-party involved in VAT collection and monitoring.

"Restaurants which have electronic fiscal devices (EFDs) provided by the National Board of Revenue (NBR) are facing the most harassment. Some young locals, who are not NBR staff but appointed by the ward councilor offices, bring false allegations against these restaurants, saying that they are not using the EFDs and so the owners are facing cases," said Toufiqul Islam, treasurer of Broa. 

Broa demanded the removal of these personnel from the VAT monitoring system.

"Most of the restaurants are not using EFD machines. In such a situation, EFD user restaurants are suffering business losses," said Toufiqul.

Mentioning the Dhanmondi area of Dhaka as an example, he said, "The area has around 350 restaurants, but only three of them are using EFD machines."

Broa demanded that EFD machines be set up at all the restaurants. Otherwise, measures to collect VAT will fail. 

"If the authorities can operate a smooth VAT collection system, the government might receive Tk2,300 crore per year from the restaurant sector. But now the amount is not more than taka 200 crore due to mismanagement," said Imran Hasan. 

Demand for fixing 10% commission for online delivery

The restaurant owners claimed that the online food delivery companies are taking 30-40% commission per delivery, while Indian restaurants are giving only 10% as commission. 

"The whole online food delivery sector is operating in a situation of anarchy. The commission rate taken by the companies is absurd," said Ashfaq Rahman Asif, managing director of 138 East restaurant and publicity secretary of Broa. 

Now, Broa wants a policy for online food delivery services and a maximum 10% commission for them.

6-month stimulus demanded for workers

The country has around 60,000 restaurants employing around 30 lakh people, according to Broa.

"Around 30% of restaurants have permanently closed down their businesses and many have shifted ownership amid the Covid-19 pandemic. Due to the crisis, around 40% of employees have lost their jobs," said Imran Hasan.

Now the association wants a stimulus package for six months or a monthly food assistance system for the workers of the sector.

Current sales 15-20% compared to pre-pandemic period

After remaining closed for a long time, restaurants reopened with 50% of their capacity on 23 May this year.

"Currently, we have only 15-20% business compared to the pre-Covid-19 period," said Syed Mohammad Andalib, organising secretary of Broa.

At a time when the restaurant sector was gradually recovering from last year's Covid-19 blows, the fresh Covid-19 wave became a great barrier to that recovery. Restaurant owners said businesses had recovered 60-70% after reopening in July last year. But due to the second wave of coronavirus cases and deaths, business declined to 20-30% compared to normal times.

Among others, Broa President Osman Gani was present at the press conference.