Bangladesh Withdraws VAT Plan for Small Businesses, Softens Tobacco Tax Hikes

• The government will withdraw its proposal to impose package VAT on small businesses after strong trader protests and SME concerns.
• The VAT requirement for all retail businesses from July 1, 2026, is likely to be removed from the Finance Bill 2026.
• The NBR had expected about Tk 2 billion in extra VAT revenue, but the main aim was to widen the VAT base, not raise revenue sharply.
• Several tobacco tax hikes will also be softened, including keeping nicotine pouch SD at 35% and dropping a raw-material tax increase for cigarettes.
• Officials said reversing proposed tobacco tax increases is rare, and the package VAT proposal could have created compliance problems and pushed businesses into avoiding the standard VAT system.

Source: today.thefinancialexpress.com.bd

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.

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