NBR to expand tax net amid VAT hike plan
The government has decided to increase VAT on 43 goods and services to 15%, along with raising taxes on items like airfares, cigarettes, medicine, detergents, and soaps – an unprecedented move in Bangladesh in the middle of the fiscal year
Following the government's decision to increase the value-added tax (VAT) late last week, the National Board of Revenue (NBR) announced efforts to expand income tax coverage.
A press release from the NBR reads, "Along with VAT, various steps are being taken to widen the tax net as well.
"In the continuation of gradually moving away from the culture of income tax exemption, the provisions of income tax exemption are being abolished and amended and are in the process of being amended."
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The NBR also emphasised that without increasing revenue from sectors other than daily necessities, there would be a significant budget deficit.
The interim government has decided to increase VAT on 43 goods and services to 15%, along with raising taxes on items like airfares, cigarettes, medicine, detergents, and soaps – an unprecedented move in Bangladesh in the middle of the fiscal year.
However, an ordinance on this matter has not been issued yet.
Additionally, the scope of VAT will be expanded, meaning traders who sell goods worth over Tk50 lakh per year will now be subject to the 15% VAT.
The release said, "The goods and services on which VAT, supplementary duty, and excise duty are being increased do not include daily necessities, so the prices of consumer goods of the general public will not increase and there will be no impact on inflation."
The NBR press release on Saturday further noted, "In the last four months, to increase the supply of daily necessities in the market and keep prices stable, eight products were exempted from customs duty, VAT, and income tax at the import, local, and business levels in the public interest, resulting in a significant reduction in revenue collection."
The exempted products are rice, potatoes, onions, sugar, eggs, dates, edible oil, and pesticides.
"In addition to providing extensive exemptions in customs duty rates on daily necessities in the public interest, the NBR has taken various steps to increase domestic revenue collection, implement SDGs, and increase the scope of VAT and rationalise the rate with the aim of becoming self-reliant as a nation," said the revenue authority.
