NBR Retreats on VAT Hike, Restaurant VAT Maintained at 5% Due to Protests

Staff Reporter

The National Board of Revenue (NBR) has backtracked on its decision to increase VAT in the restaurant sector. Under pressure from protests, the decision to hike VAT from 5% to 15% has been reversed mid-financial year.

Mohammad Belal Hossain Chowdhury, a member of the VAT policy division at NBR, confirmed that the VAT on hotels and restaurants will remain at 5%, as it was before. An official order will be issued today.

On January 9, the government had announced an increase in VAT and supplementary duties on over 100 goods and services, including raising VAT on restaurants from 5% to 15%, and on sweet shops from 7.5% to 15%.

In protest, the Bangladesh Restaurant Owners Association held a press conference the same day, demanding the reversal of the VAT hike and announced plans to hold a nationwide human chain on Thursday. Around 3,000 restaurant owners in Dhaka were preparing for a protest in front of the NBR office.

Restaurant owners argued that the government’s decision to increase VAT without considering the impact on the cost of living for ordinary people and the stability of the restaurant business forced them to take such actions.

Initially, NBR sent a letter to the association’s president, assuring that the VAT issue would be reconsidered. However, due to the lack of a clear decision in the letter, protests continued on Thursday.

In response to the ongoing protests, NBR decided to revert the VAT back to the original 5%. However, the human chain continued as the official gazette announcement had not yet been issued.

During the protests, owners and employees were seen holding placards that read: “Great reforms, costly allowances for bureaucrats with poor people’s VAT,” “Recover stolen money, eliminate VAT discrimination,” and “VAT hike on IMF’s advice is unacceptable.”

Imran Hasan, the general secretary of the Restaurant Owners Association, stated, “We have not yet received the official gazette; we have only heard the decision verbally. We will clarify our stance after hearing NBR’s briefing.”

While restaurant owners have received some relief from the VAT reduction, they indicated that their protests would continue until the official gazette is published.