Government plans fixed VAT system for 16 business sectors in FY2026-27: Finance Minister

The government is planning to bring 16 business sectors—including grocery stores, beauty salons and restaurants—under a fixed VAT regime in the 2026-27 fiscal year as part of broader efforts to expand the tax net and boost revenue collection.

The announcement came from Finance Minister Amir Khosru Mahmud Chowdhury in a written response during a question-and-answer session in Parliament on Wednesday (June 24).

According to the minister, the government collected Tk 141,586 crore in Value Added Tax (VAT) revenue during FY2024-25. Building on that performance, authorities are now considering a simplified fixed-tax system for a range of retail and service-oriented businesses to improve compliance and bring more enterprises into the formal tax framework.

The proposed sectors include grocery shops, garment and clothing retailers, confectionery businesses, cosmetics stores, plastic and ceramic household goods sellers, footwear retailers, hardware businesses, decorators, mobile phone and electronics traders, paint and sanitary ware dealers, tile shops, corrugated sheet traders, rod and cement sellers, furniture businesses, beauty parlours, sweet shops and restaurants.

Officials say the move is aimed at making the VAT system more transparent, predictable and easier to administer, while strengthening revenue mobilization. The initiative is also expected to encourage greater documentation and formalization among small and medium-sized businesses.

However, some business leaders have expressed concerns that the new tax structure could increase operating costs for retailers and service providers. They warn that any additional tax burden may eventually be reflected in consumer prices if not implemented carefully.

The government maintains that the primary objective is to modernize tax administration, widen the revenue base and ensure a more efficient and equitable taxation system as the economy continues to expand.