NBR to Raise VAT Rates on 43 Goods and Services

Economic Tag: Vat & Tax

Bangladesh’s National Board of Revenue (NBR) plans to raise VAT rates on 43 goods and services, including dining out, sweets, clothing, and tissue paper, from 5-7.5% to 15%. This move, intended to boost revenue and comply with IMF conditions, also includes significant increases in excise duties on air travel, generating an additional Tk 12,000 crore.

While the government seeks to rationalize VAT and improve tax collection, consumer groups oppose the hikes, citing higher costs amid inflation. Economists support VAT reform but stress the need for better tax compliance and the prevention of evasion. Despite the potential revenue increase, concerns remain about the fairness of the tax system, with wealth concentrated in a small segment of the population. Tax receipts have already declined in FY 2024-25, highlighting the pressure on the government to address tax collection challenges.

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