The government to amend the VAT law to increase the standard VAT rate to 15% on 42 items, including medicines, restaurants, hotels, sweetmeats, biscuits, and branded clothing, officials said.

The move, advised by a multilateral donor, aims to enhance revenue and meet the IMF target of raising the tax-GDP ratio by 0.6% this fiscal year.

Businesses with annual turnover above Tk 3.0 million, down from Tk 5.0 million, will now be subject to the VAT system. Those earning between Tk 5.0 million and Tk 30 million will face a 15% VAT, up from the current 4%.

The proposed ordinance may also increase supplementary duty on cigarettes from 66% to 67% and excise duty on air tickets. Domestic air tickets will rise from Tk 500 to Tk 700, while excise for non-SAARC Asian countries will increase to Tk 2,500, and for EU/USA routes, to Tk 4,000. Hajj passengers will remain exempt.

VAT at the trading stage for medicine may rise to 3% from 2.4%, while restaurants, residential hotels, and biscuits could see VAT hiked to 15% from 5%-7.5%.

The National Board of Revenue (NBR) aims to mobilize Tk 120 billion through these changes, with an ordinance expected next week following legal vetting.