Early this year, VAT on agro-processed products was raised from 5 percent to 15 percent. People in the sector had strongly demanded that the increase be withdrawn in the coming budget (2025-26). The National Board of Revenue (NBR) promised to cut the VAT, but the proposed budget did not do so.

Against this backdrop, at a post-budget press conference, Shafiqur Rahman Bhuiyan, president of the Bangladesh Auto Biscuit and Bread Manufacturers Association (BABBMA), said that by not reducing the increased VAT in this budget the government had left all agro-processed products, and the biscuit sector as well, in deep crisis. The budget stresses agriculture and food security but has no measures for developing agro-processed products, he said.

The press conference was held on Wednesday, 4 June, in the BABBMA meeting room at Jiban Bima Tower in the capital, attended by the association's leaders and members.

In a written statement, Shafiqur Rahman Bhuiyan said the government had raised VAT on agro-processed products, including biscuits, from 5 percent to 15 percent by an ordinance on 9 January. This plunged the agro-processing industry into a deep crisis. The association then held repeated meetings with senior NBR officials and other relevant authorities, explaining why the rate should be restored, and there was a promise to reduce it.

At that time, he said, the increased VAT was cut to 7.5 percent only on manufactured biscuits, while VAT on all other agro-processed products stayed unchanged. This was supposed to be adjusted in this budget.

The BABBMA president said the higher VAT had made the sector unprofitable and discouraged investment. With VAT not cut in the budget, there was a risk that the biscuit industry would fall into a major financial crisis. Production costs and selling prices would rise, and it would no longer be possible to sell low-cost biscuits to ordinary consumers. "So we want the government to consider the matter seriously in the final budget and reset VAT on all agro-processed products, including biscuits, at 5 percent," he said.

BABBMA general secretary Sakhawat Hossain Manun said the government used to tax businesses on their profits. Now it has been proposed that businesses pay one taka in every hundred as tax whether they make a profit or a loss. This alone would hurt traders in biscuits and other agro-processing, because profit margins in these businesses are very low.

"We want these issues to be considered in the final budget with the country's small and medium traders in mind. We demand that the turnover tax be set at 0.25 percent," he said.

Agriculturist KSM Mostafizur Rahman, president of the Bangladesh Agro Chemical Manufacturers Association (BAMA), said that to ensure fair prices for farm produce there was no alternative to expanding agro-processed products. The government must be sincere about this and move the sector forward with the right policy support, he said.

Source: Jagonews24. First published in Bengali on The Agro News.