Uniform 15% VAT rate planned for all sectors: NBR chief

The government plans to implement a uniform 15% value-added tax (VAT) rate across all sectors, National Board of Revenue (NBR) Chairman Abdur Rahman Khan said today (21 April).

"Standard VAT rate will be applied equally for all. Those eligible will receive rebates. However difficult it may be, we will move in this direction," he said during a pre-budget discussion with business leaders at the NBR headquarters in Dhaka's Agargaon.

The NBR chief also stressed that there will be "no compromise" on advance income tax (AIT), which is collected at the import stage.

Currently, although the standard VAT rate is set at 15%, the NBR applies reduced or truncated rates across various sectors in response to business demands. Development partners have long argued that such variations distort the tax system.

The push for a uniform VAT structure also aligns with recommendations from the International Monetary Fund (IMF), which has been urging Bangladesh to fully implement the standard rate.

Abdur noted that compliance remains a major challenge. "A section of businesses consistently pays VAT, while another group does not. This increases the burden on compliant taxpayers," he said.

Bangladesh passed a new VAT law in 2012 with provisions for a single uniform rate, but later deviated from it by introducing multiple rates for different sectors following pressure from businesses.

Business concerns over misdeclaration and overvaluation

At the same meeting, several business leaders raised concerns over import misdeclaration and alleged overvaluation by customs officials, saying these practices are undermining fair competition.

A representative of the Bangladesh Electrical Association (BEA), Mohsin Bhuiyan, said compliant businesses are being pushed out of the market.

"Honest businesses are on the verge of disappearing. One of the main reasons is imports through misdeclaration. Are only businesses responsible for this, or is no one else accountable?" he said.

Importers also alleged that customs authorities often assess goods at values higher than actual import prices, forcing them to pay additional taxes, which in turn increases product prices.

A representative of the Bangladesh Sustainable and Renewable Energy Association said solar panels are sometimes assessed at nearly three times their actual import value, significantly increasing tax burdens.

Similarly, a representative of the Bangladesh Manufacturers Association of Transformers and Switchgears said a transformer component imported at $1,400 is being assessed at $2,800, effectively doubling the tax liability.

Responding to the complaint, the NBR chairman said many businesses have come to assume that operating honestly is not viable under the current system.

He reiterated that ensuring compliance across the board remains one of the biggest challenges for the tax authority, as non-compliance by some increases pressure on those who follow the rules.