Restaurant Sector Calls for Tax Reform

The Bangladesh Restaurant Owners Association has called for urgent reforms to what it describes as an unequal and inconsistent value-added tax (VAT) regime affecting the country’s food service industry. The association argues that restaurants, catering services, and street food operators are not being treated equitably, resulting in unfair competition and financial strain on formal businesses.

Speaking at a press conference held on Friday at the organisation’s office in Purana Paltan, Dhaka, leaders of the association highlighted what they termed “policy discrimination” within the sector. The written statement was presented by the organisation’s Secretary General, Imran Hasan.

Imran Hasan stated that while the government has attempted to design a business-friendly budget despite ongoing economic challenges, inflationary pressures and constraints in the banking sector have significantly increased operational costs for restaurant businesses. Rising prices of LPG gas and electricity, in particular, have added further strain, pushing the industry into what he described as a “serious crisis”.

He expressed gratitude to the Prime Minister Tarique Rahman and Finance Minister Amir Khasru Mahmud Chowdhury for their efforts in budget formulation, but criticised the lack of targeted support for the hospitality sector.

A key concern raised was the disparity in VAT rates. According to the association, restaurants currently pay 5 per cent VAT, while catering services are charged 15 per cent. Street food vendors, meanwhile, largely operate outside the VAT net. The association argued that such discrepancies distort competition and disadvantage compliant businesses.

VAT Structure Highlighted by the Association

The association further demanded that all forms of food service, including street food vendors, be brought under VAT registration to ensure a level playing field and to increase government revenue. According to its leaders, the absence of uniform taxation continues to fuel unfair competition across the sector.

Another major issue highlighted was the regulatory burden faced by restaurant operators. Imran Hasan noted that business owners are required to obtain 10 to 12 different licences from multiple government agencies to operate a single establishment. This, he said, not only increases costs but also creates bureaucratic delays that hinder both business efficiency and effective monitoring.

To address these challenges, the association proposed the introduction of a “one-stop service” for the restaurant industry. Such a system, they argued, would streamline compliance procedures, reduce administrative complexity, and improve coordination among regulatory bodies. They also emphasised the importance of training and skills development for workers in the sector.

In addition, the association urged the government to formulate a dedicated industrial policy for the hotel and restaurant sector. According to Imran Hasan, a separate policy framework would help integrate licensing, taxation, investment facilitation, food safety standards, technological adoption, and human resource development under a unified structure. He warned that fragmented oversight across multiple ministries and agencies continues to impose unnecessary costs on entrepreneurs.

The press conference was attended by senior leaders of the association, including Vice-President Shah Sultan Khokon, Joint Secretary General Firoz Alam Suman, and Organising Secretary Taufiqur Islam, among others. They collectively reiterated their call for urgent policy reform to ensure fairness, sustainability, and long-term growth in Bangladesh’s hospitality sector.