The National Board of Revenue (NBR) has announced a revision of the Value Added Tax (VAT) on ready-made garments (RMG) in response to widespread public outcry. The tax authority has reduced the VAT on branded clothing from 15 per cent to 10 per cent, while non-branded garments will now incur a 7.5 per cent VAT, a change from the previous uniform rate of 7.5 per cent for both categories.
This decision comes just two weeks after the Government raised the VAT rates on nearly 100 goods and services, prompting concerns that such increases would exacerbate inflation, which has remained above 9 per cent since March 2023.
The NBR’s latest adjustments aim to alleviate the financial burden on consumers and support the struggling garment sector, which is a significant contributor to Bangladesh’s economy. The move has been welcomed by industry stakeholders who had expressed concern over the potential negative impact of the earlier tax hikes on sales and consumer spending.
The NBR’s revised VAT structure reflects a commitment to balancing revenue generation with the need to support local businesses and consumers, particularly in the ready-made garment sector, which plays a vital role in employment and economic growth.
