Decision to reduce VAT on internet, restaurant and clothing
The National Board of Revenue (NBR) has moved away from their decision to increase VAT (value added tax) from some of the sectors in the face of massive criticism over the decision.
The NBR has decided to reduce the supplementary duty on the IT (information technology) sector, including talk time and internet data, to 20 per cent from 23 per cent.
Similarly, it has been decided to impose 5 per cent VAT on restaurant bills instead of 15 per cent. Besides, VATs on clothing, sweets and non-AC hotels and several sectors have been reduced to 10 per cent. The government had imposed 15 per cent VAT on these sectors.
NBR decided to reduce VAT in several sectors on Thursday, reliable sources confirmed. The decision will be finalised through notifications within a few days.
Earlier, on 9 January, the government raised VATs on more than 100 products and services through an ordinance. Such a decision in a time of high inflation rate drew widespread criticisms across the country.
Several business organisations started holding press conferences to express their reactions. The restaurant business owners even formed a human chain in front of the NBR yesterday under the banner of Restaurant Owners’ Association.
Speaking to Prothom Alo, Dhaka Chamber president Taskin Ahmed said, “The sudden rise of VAT in the middle of a fiscal year put the long term plans of the traders under threat. At the same time, it created financial uncertainty. We don’t support this way of increasing VAT without any discussion with the businesspersons. The decision to increase VAT is a wrong move at the wrong time. It will affect the economy. However, we welcome the new decision to reduce VAT on some products.”
VAT on talk time to be reduced
The government increased the supplementary duties on SIM card related services, including talk time, internet browsing, to 23 per cent from 20 per cent. Now, it has been decided to reduce it to 20 per cent again. So the customers won’t have to bear an additional cost for internet browsing or talk time.
VAT on restaurants to remain the same as before
The decision to increase VAT on restaurant bills has also been revoked. So the VAT on restaurant bills will remain the same as before at 5 per cent. The government had imposed a 15 per cent VAT on restaurant bills on 9 January.
The Restaurant Owners Association had been protesting the decision since the beginning. As part of the protest, they held a human chain in front of the NBR office. The decision to revoke the additional VAT came during the demonstration.
The NBR said the decision came considering the fact that food for a large portion of the country’s population is provided by the restaurants. Besides, availability of food and high inflation rate was taken into consideration.
VAT on clothing, sweets and other sectors to decrease
The VAT on readymade garments has also been reduced. The VAT on products of any company' s own brand has been reduced to 10 per cent. It was increased to 15 per cent from 7 per cent in the ordinance issued on 9 January.
The NBR also decided to reduce the VAT on sweets to 10 per cent from 15 per cent. It was 7 per cent before the 9-January-ordinance.
The VAT on the rent of the AC and non-AC hotels has been reduced to 10 per cent from 15 per cent. It was 7 per cent before 9 January. Meanwhile, the VAT on motor car garage and workshop has been lessened to 10 per cent.
The VAT on medicine at local retail level was raised by 2.4 per cent to 3 per cent. The NBR has decided to cut the additional VAT.
The NBR also decided to withdraw the entire supplementary duty on plane tickets to reduce the cost of the Hajj pilgrims. The supplementary duty on overseas trips was increased by Tk 200- Tk 1000 depending on the distance on 9 January.
Speaking to Prothom Alo, NBR member Belal Hossain Chowdhury said, “The people of the country are already burdened with the high inflation rate. At the same time, the government needs more revenue. Considering that, the government decided to increase VAT on some products and services. However, considering the common people and the struggle of the people with limited income, VAT on some sectors related to public services has been reduced.”