VAT to go up on 65 items, won't impact prices of daily necessities: Finance adviser

Finance adviser has assured that the decision to hike valued-added tax (VAT) on 65 goods and services will mostly target high-income people and will not result in heightened prices of daily necessities.

Adviser Salehuddin Ahmed made the remarks before reporters at the Secretariat on Thursday, adding the government has approved the hikes to bolster state earning and not to meet IMF demands.

Earlier, it was revealed that the NBR would soon issue a gazette announcing VAT hikes on a range of goods and services -- most likely to comply with IMF bailout terms.

The targets include high-end products and services including powder milk, biscuits, juice, mattresses, transformers, tissue papers, factory-manufactured pickles, mobile bills, internet bills as well as eateries offering services rated four-star and above, branded sweet stores, posh garment outlets, air fare, hotel rents, and more.

The VAT for branded sweet stores, branded apparel outlets and hotel fare would rise from 7% to 15%, and that for airconditioned eateries would rise from 5% to 15%.

In December, IMF demanded an overall VAT hike to 15% for Bangladesh to get the fourth tranche of a $4.7 billion package. The Prof Yunus-led interim government has sought an additional $0.75 billion, but must comply with IMF terms to expand VAT net, hike VAT rates and expand the tax-GDP ratio to 0.2%.