Govt may revert VAT, SD hikes on restaurants, medicine, ISPs

Facing widespread public criticism, the National Board of Revenue (NBR) is reviewing the possibility of reversing the imposed value-added tax (VAT) and supplementary duty hikes on restaurants, medicines, and internet service providers (ISPs), which were introduced on 9 January.

Speaking on condition of anonymity, a senior NBR official told The Business Standard that representatives from these sectors have sent the NBR letters outlining their justifications for the reversal. 

"Considering the public interest, the increased VAT and supplementary duty imposed on these sectors may be withdrawn or reduced," the official said.

Meanwhile, a letter signed by Md Moshiur Rahman, first secretary of the NBR's VAT Policy Division, was sent to the president of the Bangladesh Restaurant Owners Association today (15 January). 

The letter stated that considering the appeal of the association, a decision has been made to review the VAT rate for this sector.

Previously, the VAT on restaurants was 5%, which was tripled to 15%. Additionally, the VAT on medicine trading was increased from 2.4% to 3%, and a 10% supplementary duty was imposed on ISPs.

In total, the government increased VAT and supplementary duties on nearly 100 goods and services, leading to widespread public criticism. Businesses even threatened to go on strike.

The Restaurant Owners Association announced a human chain protest in front of the NBR and even threatened to close restaurants.

Imran Hasan, general secretary of the association, said, "If the VAT is more than 5%, we will go on strike. Our demand is to reduce it to 3%."

According to a survey of the Bangladesh Bureau of Statistics in 2021, there are a total of 4,36,274 hotels and restaurants in the country.

Meanwhile, entrepreneurs in the medicine sector also sent letters to the NBR requesting a reduction in VAT.

The Bangladesh Association of Pharmaceutical Industries has decided to write to the Ministry of Health and Family Welfare and the chief adviser demanding the withdrawal of the increased VAT on medicine. 

Dr Sayedur Rahman, special assistant at the Ministry of Health and Family Welfare, said, "We have taken initiatives from the ministry to withdraw the increased VAT on medicines. We hope this will be resolved."

The NBR official said the increased VAT on medicines may be withdrawn.

However, the official confirmed that the supplementary duty on ISPs and the increased VAT on restaurants will not be completely withdrawn but may be reduced.

Under pressure from the International Monetary Fund (IMF), the NBR had set an unprecedented target of collecting Tk12,270 crore by increasing VAT and supplementary duty on various goods and services.