TOAB concerned as costs set to go up

Travelling through tour operators or visiting amusement and theme parks will now cost at least 15 per cent more, as prices rise in the entertainment and tourism sectors.

Although the government has taken various initiatives to attract tourists to Bangladesh, this time the market has indicated to increase the spending on tourism and entertainment.

The sector people said that it is proposed to withdraw the existing Value Added Tax (VAT) exemption on tour operator services. Meanwhile, the current 7.5 per cent VAT on amusement parks and theme parks is proposed to be doubled.

Presenting the national budget for FY2024-25 in parliament last Thursday, Finance Minister Abul Hassan Mahmood Ali proposed the withdrawal of the existing VAT exemption upon tour operator services in order to increase revenue collection and enhance VAT compliance.

“I propose to fix VAT to 15 per cent instead of the existing 7.5 per cent on amusement and theme parks,” he said.

The tour operators said it will heavily impact the tourism industry which is already struggling to attract foreign tourists due to poor policy making and lack of government support.

Additionally, tour operators and amusement parks have suffered the most during the Covid-19 pandemic. Their businesses were closed for almost two years, resulting in significant losses. These new decisions will adversely affect their businesses once again.

Bangladesh Association of Amusement Parks and Attractions (BAAPA) Chief Coordinator Anup Kumar Saha told The Business Post that this business was recognised as an industry sector in 2022. The industry has a market value of around Tk 12,000 crore and directly employs 6,00,000 people.

He also noted that no other industry has been subjected to such a high VAT rate. "We proposed to the government to reduce the VAT and make it 5 per cent. However, they have proposed to impose a 15 per cent VAT, doubling the existing rate. This will have a detrimental effect on our business," he added.

Anup said that the amount of money people spend on entertainment will continue to increase, discouraging people from visiting parks less. “Meanwhile, if we compromise the amount for our customers, our business will suffer. So it needs to be reconsideration,” he further remarked.

The finance minister said that the proposed budget is made to make the tourism industry more sustainable. “With the aim of developing a sustainable tourism industry, we have taken initiatives to provide advanced training along with registration of all tour operators and tour guides involved in the industry.”

Shiblul Azam Koreshi, the former president of the Tour Operators Association of Bangladesh (TOAB), expressed concerns saying that a new VAT policy will increase the cost of tourism in Bangladesh and discourage foreign visitors.

He said that tour operators in Bangladesh already pay VAT on the services they purchase from hotels, restaurants, and transport companies. These service providers also pay VAT separately. If tour operators are required to pay extra VAT on top of these existing VATs, it will make tours more expensive for foreign tourists.

Koreshi also expressed concern that the cost of tourism in Bangladesh is already high compared to neighbouring countries. The new proposed amount of VAT will make Bangladesh a less attractive destination for foreign tourists.

“Therefore, the withdrawal of this VAT should be reconsidered for the development of the tourism sector,” he said.