FICCI Bangladesh Expresses Concern Over Sudden VAT and Tax Hikes
The Foreign Investors’ Chamber of Commerce and Industry (FICCI) Bangladesh has voiced deep concern regarding the recent decision to increase VAT and Supplementary Duty (SD) on various products without prior consultation with key stakeholders.
In a press release issued on Monday, January 13, signed by Executive Director T.I. Tamim and Communication and Stakeholder Specialist Suborna Mostafa, FICCI highlighted the potential negative implications of the tax hikes.
The statement noted, “FICCI represents 90% of the total Foreign Direct Investment (FDI) in Bangladesh, encompassing high-revenue sectors such as tobacco, telecommunications, energy, and financial institutions, which collectively contribute approximately 30% of the country’s internal revenue. The recent increase in VAT, SD, and other taxes is likely to impact consumers and significantly raise the cost of doing business in the country. This decision may destabilize the economy and hinder economic growth.”
The statement further warned that while industries will attempt to mitigate losses, consumers are expected to face potential price increases. “An increase in the VAT rate from 5% to 7.5% will raise retail purchase costs by 2.5%. This may compel consumers to reduce product usage, rendering the government’s strategy to increase revenue through tax hikes ineffective,” it added.
FICCI emphasized its history of collaboration with the government to create a conducive business environment and to formulate rational and sustainable revenue and regulatory policies aligned with long-term economic goals. However, it expressed concern over the government’s unilateral decision this time without any prior discussions.
Established in 1963, FICCI is the leading chamber representing multinational companies and foreign investors in Bangladesh, contributing significantly to the country’s economic development. It represents investors from 35 countries across 21 sectors.
Last Thursday, the government raised VAT, supplementary, and excise duties on over 100 products and services through two ordinances. The sudden mid-fiscal year increase has triggered strong reactions from political parties, economists, and consumers, who criticized the government’s move. Additionally, the suspension of Trading Corporation of Bangladesh’s (TCB) truck-based product sales has further fueled public discontent.
