- The interim government has decided to increase the Value Added Tax (VAT) due to pressure from the International Monetary Fund (IMF)
- VAT on 43 types of goods and services may increase to 15%
- The expected VAT hike could raise prices of goods and services before the budget announcement
- This could lead to a decline in the purchasing power of the general public and pose challenges for businesses
- Critics suggest improving revenue collection through higher direct taxes instead of increasing VAT
- The draft of the Value Added Tax and Supplementary Duty Amendment Ordinance 2025 received preliminary approval
- Dr Salehuddin Ahmed claims the VAT increase will not impact product prices as essential goods will have zero duties
- He also mentioned that the items with increased taxes have minimal impact on key inflation indicators like rice and lentils
- Business leaders argue that the VAT increase is ill-timed and could reduce revenue instead of increasing it
- They highlight that rising inflation is already burdening the public and additional VAT on essential items will worsen the situation
- The business community is still recovering from losses due to recent political upheavals and student protests
- The IMF mandated a 15% VAT rate as part of its loan conditions during their recent assessment visit
- Economists view the VAT increase as a measure to meet IMF conditions and warn it might raise expenses for the middle and upper-middle classes
Source: dhakatribune.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
