The National Bureau of Revenue (NBR) reduced VAT rates to revive the restaurant sector from the pinch of the pandemic
The restaurant sector may now rejoice as value added tax (VAT) on both air conditioned (AC) and non-air conditioned (non-AC) eateries has come down, a day before the national budget was passed in parliament on Wednesday.
The National Bureau of Revenue (NBR) reduced VAT rates to revive the restaurant sector from the pinch of the pandemic.
According to the amended Finance Bill 2021, VAT on AC restaurants has come down from 15% to 10%, while for non-AC restaurants, VAT was reduced from 7% to 5%.
About the VAT policy, NBR officials said that the restaurant sector was on the brink of collapse due to the Covid-19 pandemic since last year.
The government stepped in to support them with this measure, they also said.
The restaurant owners welcomed the decision, adding that the decision was a positive step in overcoming the multi-faceted losses the sector had been incurring since the outbreak in March last year.
Talking to Dhaka Tribune, Imran Hasan, general secretary of Bangladesh Restaurant Owners Association (BROA), said that they were thankful to the prime minister, finance minister, NBR, and also the FBCCI for this decision.
“We presented a number of demands for the proposed budget of FY22, though not all of our demands were met. However, one of our main demands was to reduce the VAT rate, which the government obliged. We welcome this decision,” he also said.
Imran Hasan also said that the restaurant sector was one of the emerging sectors in the country but it was almost drowning in the pandemic situation.
Besides the budget, the government can implement any act or rules on various issues. They should keep an eye on management of the restaurant sectors as well, Hasan also said.
“Now we demand a single organization to monitor the restaurants and the government should create this in coordination with all of 13 organizations under different ministries and departments are involved in restaurant management and another 7 organizations including the DC office, Safe Food Authority, Consumer’s Rights Protection Authority, RAB and BSTI - monitor the restaurants,” he also said.
Syed Andalib Rahman, organizing secretary of BROA, told Dhaka Tribune that the decision of reducing VAT rates in the restaurant sector was a positive sign for the restaurant owners, as they had been demanding it for a long time.
“We need a lot of cooperation from the government to turn around this pandemic. We are thankful to all the concerned for this decision. However, supplementary duty is also a burden in this sector. A provision in this regard is also important,” he added.
He also said that they do not get SME loans as the sector is labeled as a sector dealing with perishable goods. The government should remove this obstacle through dialogue and give them long-term loans on easy terms from the SME Foundation and a monthly incentive for the officials and employees of the hotel and restaurant sector for monthly food assistance for them for the period of July to December of this year.
An official from the NBR told Dhaka Tribune that this decision was taken mainly for the benefit of the restaurants and the customers, as the sector had severely suffered during the pandemic.
Providing this facility will make it easier for them to turn around. Moreover, customers will also be benefitted from this, he also said.
He also said that one of the complaints of restaurant owners for so long was that many restaurants were discouraged from registering for VAT due to higher rates.
“Now they can no longer make that complaint. Since the VAT rate has been reduced, all restaurants will have to pay VAT at the amended rate and the NBR will monitor it regularly,” he also said.
According to BROA, there are currently about 60,000 restaurants across the country, with more than 8,000 in the capital alone. Close to 2.8 million people depend on the restaurant industry for their livelihoods, while the number is several times higher if it includes the supportive sectors.
The national parliament passed a Tk6,03,681 crore national budget for fiscal year 2021-2022 on Wednesday, which was also the last day of the outgoing fiscal year (FY21).
Finance Minister AHM Mustafa Kamal moved the Appropriation Bill, 2021 seeking a budgetary allocation of Tk792,912.95 crore, which was passed by voice vote.
Earlier, on June 29, the parliament passed the Finance Bill, 2021 with some changes as well.