The interim government of Bangladesh has decided to impose a 15% VAT at the production stage on products like biscuits, pickles, mosquito coils, and tissue paper, among 43 items and services. This move is part of amendments to the VAT and Supplementary Duty Act, 2025, which were approved in a council meeting on Wednesday and are pending vetting by the legislative division. Once approved by the President, the ordinance is expected to be issued on Saturday, potentially increasing consumer expenses.

The National Board of Revenue (NBR) proposed raising VAT on 43 goods and services, which currently have a VAT rate of 5-10%. This increase aims to meet revenue collection targets as part of conditions tied to an IMF loan. The NBR plans to generate an additional Tk 12,000 crore in the remaining six months of the fiscal year (January-June 2024-25).

As part of this, VAT on hotel and restaurant services may rise from 5% to 7.5%, with VAT on non-AC hotels doubling from 7.5% to 15%. Similarly, VAT on local apparel brands may increase from 7.5% to 15%, applying to both branded and non-branded clothing.

The NBR also plans to increase VAT on pharmaceuticals and trade VAT from 5% to 7.5%. Additionally, supplementary duties on imports like soap, detergent, paint, and betel nuts could be raised. Airfare costs are set to rise, with excise duties on domestic tickets increasing from Tk 500 to Tk 700, on SAARC region flights from Tk 500 to Tk 1,000, and on international flights to other countries from Tk 3,000 to Tk 4,000.

An unnamed NBR official mentioned that the tax adjustments are necessary to meet the IMF’s revised revenue collection targets. If approved, the new VAT rates will come into effect through an ordinance on Saturday, with plans to introduce a uniform 15% VAT on most goods and services in the next fiscal year.