The National Board of Revenue (NBR) has decided to reverse its recent move to increase the Value Added Tax (VAT) and supplementary duties on restaurants.
The Bangladesh Restaurant Owners Association (BROA) had announced nationwide protests against the hike, including a human chain demonstration in front of the NBR headquarters in Dhaka on Thursday morning.
In response, the government decided to revert the VAT rate for the sector back to 5 percent.
NBR Member (VAT Policy) Mohammad Belal Hossain Chowdhury confirmed that the VAT rate in the hotel and restaurant sector would be restored to its previous level of 5 percent. He stated that an official order to this effect would be issued on Thursday.
The BROA had called for nationwide protests on Thursday, with approximately 3,000 restaurant owners and workers from the Dhaka district planning to gather outside the NBR building for the demonstration.
The government chose to reconsider the VAT increase before the protest took place.
Despite this, several hundred restaurant owners and workers gathered outside the tax agency’s office on Thursday, holding up signs and shouting slogans in protest.
Commenting on the reversal, BROA General Secretary Imran Hasan said, “We have yet to receive a gazette. We have been informed verbally.”
“A meeting is being held at the NBR offices. We will hear their updates after the meeting and then deliver our main statement.”
The NBR’s VAT Law and Rules Branch sent a letter to the BROA president on Wednesday, notifying them of the decision to reconsider the VAT increase.
While the NBR assured the association of its intent to review the VAT hike, the BROA proceeded with the protest programme.
The NBR’s letter acknowledged the concerns raised by the BROA and confirmed that it had thoroughly reviewed the association’s prior communication. It stated that the VAT rate in the restaurant sector would be reconsidered.
The letter also sought the association’s cooperation in “increasing revenue, broadening the scope of VAT, and maintaining law and order.”
In their protest announcement, the BROA criticized the government’s sudden decision to triple the VAT rate in the restaurant sector midway through the fiscal year.
They described the move, which included raising VAT on 43 products and services such as ready-made garments, restaurants, and sweets, amid high inflation and without consulting traders, as “irresponsible.”
On January 9, the government issued an ordinance increasing VAT and supplementary duties on over a hundred products and services at the import, production, and supply levels.
Among these changes, the VAT on restaurants was raised from 5 percent to 15 percent, while the VAT on confectioneries increased from 7.5 percent to 15 percent.
On the same day, the BROA held a press conference demanding that the decision to raise VAT be withdrawn.
