Restaurant owners threaten to go on strike unless the government revises its VAT hike proposal

The Bangladesh Restaurant Owners Association has threatened to go on strike unless the government reconsiders its plan to increase the Value Added Tax (VAT) on hotels and restaurants.

The warning was issued during a press conference held at a hotel in Dhaka on Thursday.

Imran Hasan, Secretary General of the Restaurant Owners Association, expressed concern about the impact of the proposed VAT hike, particularly given the current high inflation. He argued that the plan would directly affect the general public.

Hasan suggested that the government could address budget deficits by reducing administrative costs and cutting unnecessary projects, rather than imposing a heavy tax burden on businesses.

The National Board of Revenue (NBR) has proposed increasing VAT on food served at hotels and restaurants. At present, patrons at both regular and air-conditioned (AC) restaurants pay a 5% VAT, which could rise to 7.5%. For non-AC hotels, the VAT is set to double from 7.5% to 15%.

Hasan criticized the government for relying on VAT as a primary revenue source instead of expanding direct taxes. "Only about 525,000 businesses are VAT-registered, with roughly 350,000 regularly paying VAT. The NBR has not taken effective steps to bring millions of unregistered businesses under the VAT net," he said.