A single VAT rate to apply to most products and services from the next fiscal year

Enforcement is set to begin in the second half of the current fiscal year, with more than 20 items expected to lose their reduced VAT rates within this month. Products and services currently taxed at 5%-10% VAT will be subject to a standard 15% VAT rate, in accordance with the law. Additionally, many existing exemptions for certain industries may be eliminated, and supplementary duties could rise, according to sources within the National Board of Revenue (NBR). However, certain services, such as electricity and gas, may continue to have reduced rates to protect consumers from additional cost burdens amid persistent inflation, officials said. "We plan to implement a 15% unified rate across the board starting this month," a senior VAT policy official from the NBR told *The Business Standard* yesterday. Sources also suggest that the advisory committee responsible for NBR reforms may support a unified VAT rate, but potentially at a rate lower than 15%. While a single rate could increase VAT collection and streamline the process for the NBR, experts and business owners are concerned that this could pass the burden onto consumers, leading to higher prices across goods and services and adding further pressure to inflation. Currently, around 120 goods and services, including powdered milk, various spices, food items, LPG, internet services, and ride-sharing services, are taxed at VAT rates ranging from 5% to 10%. Most of these may soon be included under the unified VAT rate. A senior official from the NBR's VAT wing stated, "In line with IMF conditions, we expect a significant number of products to transition to a single VAT rate by the end of this month." "After that, in the upcoming budget, most exemptions are likely to be removed, and nearly everything will come under the unified rate," the official added. NBR Chairman Abdur Rahman Khan declined to comment on the matter but mentioned at a recent event in Dhaka that the revenue authority was under pressure to significantly reduce tax exemptions to meet IMF conditions.