Wednesday, 22 January, 2025
Amid soaring inflation, the interim government has announced a significant hike in taxes, duties, and VAT on over a hundred goods and services, including essential items such as medicines, LPG, and mobile SIM cards. The changes were enacted immediately following the issuance of two ordinances on Thursday.
The National Board of Revenue (NBR) issued directives the same evening, making the tax and duty increase effective immediately. Analysts have warned that the new measures, influenced by conditions set by the International Monetary Fund (IMF), are likely to trigger price hikes for essential goods and services. However, Finance Advisor Salehuddin Ahmed and the NBR insisted that consumers would not face substantial additional costs.
In a media statement, the NBR claimed that the impact on inflation would be minimal. Despite these assurances, experts argue that the affected goods and services—many of which are essential in the current economic context—could exacerbate non-food inflation.
The two ordinances, titled the Value Added Tax and Supplementary Duty (Amendment) Ordinance 2025 and the Excise and Salt (Amendment) Ordinance 2025, were issued late Thursday. The interim government's Advisory Council approved the NBR’s proposal to raise VAT and supplementary duties on January 1. The ordinances were enacted after consultations with the law ministry and formal approval from Chief Advisor Muhammad Yunus and President Mohammed Shahabuddin.
The government resorted to ordinances to implement these tax changes in the absence of a national parliament. The IMF, as part of its $4.7 billion loan agreement, mandated the government to generate an additional Tk 120 billion in revenue for the 2024-25 fiscal year. This requirement led to the abrupt increase in VAT midway through the fiscal year.
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Amid soaring inflation, the interim government has announced a significant hike in taxes, duties, and VAT on over a hundred goods and services, including essential items such as medicines, LPG, and mobile SIM cards. The changes were enacted immediately following the issuance of two ordinances on Thursday.
The National Board of Revenue (NBR) issued directives the same evening, making the tax and duty increase effective immediately. Analysts have warned that the new measures, influenced by conditions set by the International Monetary Fund (IMF), are likely to trigger price hikes for essential goods and services. However, Finance Advisor Salehuddin Ahmed and the NBR insisted that consumers would not face substantial additional costs.
In a media statement, the NBR claimed that the impact on inflation would be minimal. Despite these assurances, experts argue that the affected goods and services—many of which are essential in the current economic context—could exacerbate non-food inflation.
The two ordinances, titled the Value Added Tax and Supplementary Duty (Amendment) Ordinance 2025 and the Excise and Salt (Amendment) Ordinance 2025, were issued late Thursday. The interim government's Advisory Council approved the NBR’s proposal to raise VAT and supplementary duties on January 1. The ordinances were enacted after consultations with the law ministry and formal approval from Chief Advisor Muhammad Yunus and President Mohammed Shahabuddin.
The government resorted to ordinances to implement these tax changes in the absence of a national parliament. The IMF, as part of its $4.7 billion loan agreement, mandated the government to generate an additional Tk 120 billion in revenue for the 2024-25 fiscal year. This requirement led to the abrupt increase in VAT midway through the fiscal year.
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