Govt backtracks on restaurant supplies moving to 15% standard rate
The Bangladeshi National Board of Revenue (NBR) on 17 January has excluded restaurant services from the move from the 5% reduced rates to the standard 15% rate. The change comes following heavy lobbying by the Bangladesh Restaurant Owners Association.
The NBR had proposed to move a range of over 40 supplies of goods and services from the reduced rates of 5% and 7.5% to the standard 15% VAT rate. The changes will come into effect after the issuance of an official notification.
This includes:
- Restaurants (now excluded)
- Confectionery
- Clothing
The revenue raising measure is based on recommendations from the International Monetary Fund with is renegotiating a $5 billion debt. Bangladesh has one of the lowest tax-GDP ratios in the world, and economists say the low revenue collection compels the government to resort to costly borrowing from domestic and foreign sources.
VAT is the biggest source of revenue for Bangladesh, accounting for nearly 38 percent of the total revenue collection.
