The interim government has decided to halt plans to increase VAT on mobile bills, medicines, and restaurants, according to Mohammad Belal Hossain, a member of the National Board of Revenue (NBR), and Barrister Md Badruzzaman Munshi, the organization’s Second Secretary.

The decision aims to protect low-income earners from financial strain. An official notification formalizing the decision is expected on Thursday, NBR officials confirmed.

Under this revised plan, VAT on restaurants will remain at 5%. Earlier, the government had proposed raising restaurant VAT to 15%, increasing VAT on medicines from 2.4% to 3% at the production stage, and raising VAT on mobile use from 20% to 23%.

These tax hikes were initially planned to meet the International Monetary Fund's (IMF) conditions for unlocking a $4.7 billion bailout package, which includes raising the tax-GDP ratio by 2%.

The proposed increases faced backlash, with restaurant owners planning a human chain protest and pharmaceutical companies warning that higher duties on medicines would raise healthcare costs across all income groups.

BDST: 1320 HRS, JAN 16, 2025
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