Processed food VAT hike: BAPA urges revenue board to reconsider decision

The Bangladesh Agro-Processors Association (BAPA) Thursday urged the National Board of Revenue (NBR) to reconsider the decision to increase VAT on processed food.

The government has already withdrawn the increased VAT and duties imposed on mobile services, internet, and restaurants.

"Now, we expect a similar decision for processed food," Pran-RFL Group Chairman and Chief Executive Officer Ahsan Khan Chowdhury said after a meeting between BAPA and NBR in the capital's Agargaon.

BAPA leaders met NBR Chairman Md Abdur Rahman Khan to urge him to withdraw the increased VAT and duties on processed food.

Chowdhury said following the meeting, "We requested the NBR to reinstate the previous VAT and duty rates. The NBR chairman assured us that he would consider the matter positively and also directed officials to look into it. We expect a prompt solution."

Expressing optimism, he said, "We hope for a favourable resolution within a week. The VAT hike has put unnecessary pressure on consumers during difficult times. Our goal is to ensure that food products remain affordable for the public."

On January 9, the NBR raised VAT on more than 100 products and services. However, due to criticisms from the business community, the government rolled back the increased VAT on restaurants, mobile services, and workshops.

Chowdhury said VAT on some products had increased by over 200 per cent.

"For example, a Tk 5.0 biscuit will now cost Tk 7.0, while juice priced at Tk 20 will cost Tk 25. This increase will significantly burden both consumers and farmers," he explained.

The business leader also said biscuit prices could increase by 10 per cent and fruit juices by 20 per cent due to the new VAT and supplementary duties.

"We have humbly appealed to the government to reconsider these hikes, as Bangladeshi consumers cannot afford such price increases," Chowdhury added.

BAPA leaders emphasised VAT rates in Bangladesh are higher than those in countries like India, Indonesia, and Vietnam.

"To keep food products affordable and within people's purchasing power, the increased VAT and duties must be withdrawn," Chowdhury stressed.

When asked about the association's next steps if the government does not entertain its request, he said, "We will continue to engage with the government constructively through dialogues, seminars, and discussions. We want to show that increasing tax rates does not necessarily lead to higher revenues."

Despite the January 9 VAT hikes, companies have not yet raised their product prices.

However, Chowdhury said, "We are incurring significant losses. We need to stabilise our operations and bring our factories back to profitability."

BAPA leaders also submitted a memorandum to the NBR chairman, requesting the withdrawal of the increased VAT and duties on processed food products.

Among those present at the meeting were BAPA President Md Abul Hashem, Meghna Group Chairman Mostafa Kamal, Partex Star Group Managing Director Aziz Al Mahmood, as well as representatives from Akij Food and Beverage and Square Food and Beverage.

The memorandum submitted to the NBR outlined the changes introduced on January 9, including the VAT increase from 5.0 to 15 per cent on products like biscuits, cakes, pickles, and sauces.

Supplementary duties on fruit juices rose from 10 per cent to 15 per cent, while artificial and electrolyte drinks saw a new 15 per cent duty imposed.

VAT at the business level increased from 5.0 per cent to 7.5 per cent.

BAPA said these changes would have adverse effects throughout the supply chain from farmers to consumers and urged the government to reconsider the decision.

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