Following extensive criticism from business stakeholders, the government is set to reduce the newly increased VAT on several essential goods, including medicine and clothing, according to Finance Adviser Dr Salehuddin Ahmed.
"A review of VAT on certain products is underway, and the National Board of Revenue (NBR) will soon issue a directive on the matter," he said speaking to journalists after a meeting of the government's Advisory Council on Public Procurement at the secretariat on Thursday (16 January).
Responding to concerns about the impact of the VAT hike on market prices, the Finance Adviser clarified, "The price rise is not entirely due to VAT increases. While there is some impact, it is not solely attributable to VAT adjustments; supply chain issues also play a role."
The VAT and duty increases, imposed on over a hundred goods and services, including ready-made garments, medicines, sweets, and mobile phones, were enacted through an ordinance on 9 January.
This move sparked intense reactions from businesses across the country.
Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and other influential trade bodies expressed deep concerns and called for a reconsideration of the decision.
According to NBR sources, the VAT on ready-made garments and sweets will be reduced from 15% to 10%, with an official order expected shortly.
The finance adviser further elaborated, "VAT rates have been increased on a few items. For instance, how many people purchase imported fruit juices? Even if prices rise, it should not significantly affect the general populace. Nevertheless, we are reviewing several items and will announce the specifics of the VAT reductions later."
Addressing the impact on essential goods, he stated, "We are specifically reviewing the VAT on items like medicines and clothing, which affect the general population. Why should I lower VAT on imported fruit juices?"
