Agro processors issue seven-day ultimatum to review VAT hike

FE REPORT
Agro processors have issued a seven-day ultimatum for the government to reconsider the recent VAT and tax hike, and warned of taking to the streets unless their demand is met by then.
They expressed concern that the new tax measure will badly affect all the stakeholders - be it consumers or farmers and businesses - unless the new taxes are revoked immediately.
Bangladesh Agro-Processors Association (BAPA) raised the demand at a press conference at a city club on Thursday.
The National Board of Revenue (NBR) increased the Value Added Tax (VAT) and Supplementary Duty (SD) on over a hundred products and services on January 9.
VAT on machine-made biscuits, cakes, pickles, chutneys, tomato paste, tomato ketchup, tomato sauce, and fruit pulps from mango, pineapple, guava, and banana has been raised from 5.0 per cent to 15 per cent.
The supplementary duty on fruit juices and fruit drinks has been increased from 10 per cent to 15 per cent.
For artificial or flavoured drinks and electrolyte drinks (non-carbonated), the supplementary duty, which was previously zero, has now been raised to 15 per cent. The VAT at the business level, which was earlier 5.0 per cent, has been increased to 7.5 per cent.
Speaking at the press conference, Pran Group Chairman Ahsan Khan Chowdhury said the recent tax measures will affect products like juices, pickles, and snacks made from locally sourced fruits such as mangoes and pineapples.
He cautions that the increased VAT would reduce consumers' affordability, disrupt business volume, and harm farmers by shrinking demand for raw produce.
"We aim to contribute to the government revenue but not at the cost of poor consumers," he added. "We are giving the government seven days to review the decision. In the meantime, we will engage in discussions, propose solutions, and offer alternatives to the government. However, if our plea goes unheeded, we will have no option but to take to the streets."
SMC Enterprises Managing Director Saif Uddin Nasim points out that with food inflation at 13.8 per cent and the dollar rate at Tk 120, imposing additional VAT and SD will escalate economic pressures.
He urges reinstating previous tax rates, emphasising that essential items like electrolyte drinks should not be taxed as luxury goods.
Akij Food Beverage Director Zahirul Alam has criticised the policy, questioning whether it would serve citizens' interests or external pressures like the IMF.
He said arbitrary tax hikes could hurt small enterprises, farm workers, and low-income consumers, urging collaboration between the government and industry leaders.
BAPA President Abul Hashem warns that the VAT hike will stifle new investments, shrink sales growth, and lead to unemployment.
He calls for ethical and rational policies to boost revenue without hurting the agro-processing sector.
BAPA secretary Iqtadul Hoque presented the keynote, while Dr. FH Ansarey, President of ACI Agro Business Division, highlighted the processor's role in reducing the post-harvest losses and creating affordable processed foods.
He urged the government to take measures to protect this vital industry.
Dr Ansarey said it has taken several decades for the agro-processing sector to reach its current level. Initially, it was challenging for the companies to process food as consumers were reluctant to adopt processed products.
However, through persistent efforts, substantial investment and a commitment to providing safe food, the sector has evolved significantly. In addition to meeting local demand, processors are now exporting products on a large scale.
Dr Ansarey also said the processing industry has played a pivotal role in minimising post-harvest losses by a substantial margin, thereby contributing significantly to the agricultural sector. Closure of such industries will directly hit the farmers hard.
Failure to address these concerns might lead to street protests and an economic downturn, said the BAPA leaders.
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