BAPA calls on revenue board to reconsider VAT increase on processed food

BAPA Urges NBR to Reconsider VAT Hike on Processed Food

The Bangladesh Agro-Processors Association (BAPA) has called on the National Board of Revenue (NBR) to reconsider its recent decision to increase VAT on processed food. The government previously rolled back VAT and duty hikes on mobile services, internet, and restaurants, and BAPA hopes for a similar outcome for food products.

Following a meeting in Agargaon between BAPA leaders and NBR Chairman Md Abdur Rahman Khan, Pran-RFL Group Chairman and CEO Ahsan Khan Chowdhury said, "We requested the NBR to restore the previous VAT and duty rates. The chairman assured us that he would consider the issue positively and instructed officials to review it. We are optimistic about a prompt resolution."

Chowdhury expressed confidence that a solution might be reached within a week, stating that the VAT hike has unnecessarily burdened consumers during tough times. He emphasized that affordable food prices are crucial for public welfare.

On January 9, the NBR raised VAT on over 100 products and services, leading to criticism from the business community. While the government has already reversed the hikes on restaurants, mobile services, and workshops, processed food remains affected.

Chowdhury highlighted the impact of the hikes, noting that VAT on some products had increased by over 200%. He cited examples such as a Tk 5 biscuit now costing Tk 7 and juice priced at Tk 20 rising to Tk 25. He warned that such increases would strain both consumers and farmers, estimating a 10% rise in biscuit prices and a 20% increase in fruit juice prices.

BAPA leaders pointed out that VAT rates in Bangladesh are higher than in countries like India, Indonesia, and Vietnam. They stressed the importance of keeping food products affordable and accessible, urging the government to withdraw the hikes.

When asked about potential next steps if their request is denied, Chowdhury said BAPA would continue engaging constructively with the government through discussions, seminars, and dialogue, arguing that higher tax rates don’t necessarily result in increased revenue.

Despite the VAT hike, companies have not yet raised prices, but Chowdhury noted that the industry is suffering losses. "We need to stabilize operations and restore profitability," he said.

BAPA also submitted a memorandum to the NBR chairman detailing the impacts of the January 9 changes, which included a VAT increase from 5% to 15% on biscuits, cakes, pickles, and sauces. Supplementary duties on fruit juices rose from 10% to 15%, while artificial and electrolyte drinks now face a 15% duty. Business-level VAT was raised from 5% to 7.5%.

The association warned that these changes would negatively impact the entire supply chain, from farmers to consumers, and reiterated its appeal for the government to reconsider the hikes.

The meeting was attended by several industry leaders, including BAPA President Md Abul Hashem, Meghna Group Chairman Mostafa Kamal, Partex Star Group Managing Director Aziz Al Mahmood, and representatives from Akij Food and Beverage and Square Food and Beverage.