Biscuit makers seek zero VAT amid rising production costs

The Bangladesh Auto Biscuit & Bread Manufacturers' Association (BABBMA) has formally requested the National Board of Revenue (NBR) to completely withdraw Value Added Tax (VAT) on biscuit and agro-processed foods aiming to offset rising production costs, sources said.

They are disappointed that their previous recommendations, which were backed by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), were not reflected in the 2025-2026 national budget.

Currently, the NBR imposes 7.5 per cent VAT on biscuits, but according to industry insiders, prices of raw materials and packing materials have increased by 10 to 15 per cent in both local and international markets.

Biscuit producers continue to pay additional VAT, incurring business losses. The increased VAT has raised production cost, but manufacturers have not increased biscuit prices, considering purchasing power of consumers.

They said they are facing difficulties in running factories profitably due to higher inflation, increased bank interest rates, rising raw material costs and the depreciation of the taka against the US dollar from Tk 89 to Tk 123.

Many manufacturers are on the verge of closing down their factories which will result in significant job losses, they said.

An official of the NBR said, "We have received a proposal from the BABBMA and are scrutinising it."

The biscuit industry is considered a major pillar of the country's economy, providing direct and indirect employment to approximately 1 million people.

Furthermore, Bangladeshi auto-biscuits are currently exported to nearly 100 countries, bringing in a huge amount of foreign exchanges.

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