In response to widespread protests, the Government has decided to reverse a recent value-added tax (VAT) increase on clothing, which was part of a broader tax hike affecting various products and services. Officials from the National Board of Revenue (NBR) have indicated that instructions from senior Government officials will lead to an official announcement early next week.
The VAT on clothing, which had been raised to 15 per cent, will revert to 10 per cent. This decision comes as consumer groups and business representatives have voiced strong opposition to the tax hikes, citing the ongoing economic challenges and high inflation rates that have averaged over 9 per cent over the past two years.
Clothing retailers and industry advocates have welcomed the Government’s reconsideration, emphasising the need for a more stable economic environment. They argue that the initial tax increases were poorly timed and would have added to the financial burden on consumers already struggling with rising costs.
Consumer Association of Bangladesh Vice-President SM Nazer Hossain highlighted that the reversal is a positive step but urged the Government to withdraw all recent tax hikes. “The pressures from traders and business groups have prompted this decision, but a comprehensive review of all tax increases is essential given the current inflationary climate,” he stated.
The NBR’s decision to roll back the VAT increase on clothing aligns with similar actions taken for other sectors, including restaurants and internet services. However, the International Monetary Fund (IMF) has expressed concerns that these rollbacks could result in a revenue shortfall of over Taka 1,000 crore, complicating the Government’s financial targets.
As the official announcement is anticipated soon, the clothing industry remains hopeful that further support measures will be implemented to alleviate the pressures caused by high inflation and recent tax hikes.
