Local manufactured air-conditioner and refrigerator may get cheaper as the government is set to reinstate the reduced rate of value-added tax (VAT) on the products to make those affordable.

The National Board of Revenue (NBR) would cut back the VAT to 7.5 per cent from the existing 15 per cent in the budget for the next fiscal year.

The reset tax rate would be valid until June 30, 2030.

In the current budget, the NBR doubled the VAT from 7.5 per cent to 15 per cent.

A senior official of the NBR says the hike has affected the local manufacturers and increased import of cheap substandard ACs and refrigerators.

"To save foreign currencies and salvage the local manufacturers, the government has decided to reinstate the reduced rate of VAT," he adds.

Md Abdullah Al Zunaid, Chief Business Officer, Walton Home and Kitchen Appliances, says the local investors suffer when government suddenly increases tax as they usually invest for longer time.

"It takes time to get outcome and gain profits of such large-scale investments," he says, demanding the policy predictability for the investment cycles.

At the beginning of the current FY, the revenue officials estimated around Tk 20 billion in VAT from these two items this year, but as sales of local AC and refrigerator dropped, the government could not mobilise the expected tax.

These incentives aimed at promoting local manufacturing of the goods under the 'Made in Bangladesh'-branding campaign.

Meanwhile, the NBR would introduce fixed VAT at Tk 2500 per bhori of gold jewelries, instead of exiting 5.0 per cent on sales.

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