In a recent announcement, the Finance Adviser of Bangladesh, Salehuddin Ahmed confirmed that the Government will implement a hike in value-added tax (VAT) on branded apparel outlets, along with a range of other goods and services. The VAT on these outlets will rise from 7 per cent to 15 per cent, a move that the adviser claims will primarily affect high-income individuals while not significantly impacting the prices of daily necessities.
Speaking to reporters at the Secretariat on Thursday, Ahmed emphasised that the VAT increases are intended to bolster state revenue rather than to fulfill International Monetary Fund (IMF) demands. He stated, “The decision targets high-end products and services, and we expect it to have a minimal effect on essential goods that the average consumer relies on.”
The National Board of Revenue (NBR) is set to issue a gazette detailing the VAT hikes, which encompass various high-end items. Alongside branded apparel outlets, other targets include branded sweet stores, air-conditioned eateries, and luxury services, as well as products like powder milk and biscuits.
This adjustment in VAT rates comes as part of broader measures following the IMF’s request for Bangladesh to raise its VAT rate to 15 per cent as a condition for receiving the fourth tranche of a US $ 4.7 billion bailout package. The interim Government, led by Prof. Yunus, is also seeking an additional US $ 0.75 billion, but compliance with IMF terms regarding VAT expansion and tax revenue enhancement remains crucial.
