In the upcoming budget, it may be reduced to 7.5 percent. This could lower the prices of these products at the consumer level. This information was learned from sources at the Ministry of Finance.
NBR tax officials said, 'This step is being taken to provide opportunities to local enterprises. An NBR official, speaking on condition of anonymity, said, due to the high VAT at the production stage, imports of fridges, refrigerators, and ACs in the country had been increasing recently. Therefore, to reduce imports and provide opportunities to local enterprises, VAT is being reduced. Moreover, we were receiving news that the business of various manufacturing companies had also declined somewhat.'
Additionally, the VAT facility ranging from 7.5 to 10 percent, depending on features, at the production stage for mobile phones and laptops will continue until 2030. Currently, if a mobile phone or laptop manufacturing company produces at least two components or parts themselves and imports the remaining parts for local assembly, they have to pay 7.5 percent VAT at the production stage. Again, if a company imports all parts and only assembles them locally, they have to pay 10 percent VAT.
Meanwhile, the VAT exemption facility is being maintained for the import of ships. No Value Added Tax (VAT) will have to be paid for importing large ocean-going vessels. This exemption facility will remain until June 30, 2027. However, to avail this facility, ships with a capacity of more than 5,000 DWT must be imported. This VAT exemption facility was supposed to end in the current fiscal year. Now its validity has been extended by another year.
Furthermore, the 7.5 percent VAT on LPG gas imports is also being maintained in the next fiscal year. Currently, LPG gas is used as cooking fuel in households, as fuel for vehicles at auto gas stations, and as fuel in various industrial establishments.
Prices may decrease
Currently, various companies including Walton, Electromart, Transcom, Square, Singer Bangladesh, Butterfly, Rangs, Electra International, Minister, Vision, and LG are producing and marketing ACs, fridges, and other electronic products in the country.
According to NBR sources, the VAT rate on fridges, refrigerators, and ACs at the production stage was 5 percent until the fiscal year 2023-24. It was increased to 7.5 percent in the fiscal year 2024-25. It was further increased to 15 percent in the fiscal year 2025-26.
Stakeholders believe that the government's VAT exemption will have a positive impact on the business of this sector. They said this will also reduce the prices of these products. RFL Group is the leading local enterprise in the country for producing fridges, refrigerators, and ACs. When asked, Kamruzzaman Kamal, Marketing Director of PRAN-RFL Group, told Prothom Alo, 'The demand for fridges, refrigerators, and ACs is increasing now. Reducing VAT will also be good for the local industry. If VAT is reduced, prices will definitely decrease.'
When asked how much the price would decrease, he said that whatever reduction is given in VAT will be passed on to the customer.
Stakeholders said that due to the current extreme heat, the demand for fridges, refrigerators, and ACs has increased. Therefore, the decision to provide new VAT exemptions at this time will bring some relief, however small, at the consumer level.
Manufacturers consider the government's decision a piece of good news during a challenging time. When asked, Selim Ulla Selim, Director (Marketing) of Jamuna Electronics, told Prothom Alo, 'This sector has been going through challenges for two years. The price of raw materials has increased. Operating costs have increased by 30 percent. Now, if the decision to reduce VAT is made, there will be some relief.'
However, manufacturers had demanded a complete withdrawal of VAT from the NBR.
