The Bangladesh Restaurant Owners Association (BROA) today threatened to go for an indefinite strike if the interim government does not retract its decision to hike the value-added tax (VAT) on food bills in restaurants.

"We will first form a human chain. If the government remains unresponsive, restaurants across the country will be closed for a day as a token protest," said Imran Hasan, general secretary of the BROA.

"If it still does not work, restaurants will be shut down indefinitely as a final measure," he remarked.

The restaurant owners issued the warning during a press conference held at the Pan Pacific Sonargaon Dhaka hotel in the capital.

The warning comes in response to the interim government's recent move to hike VAT to a standard of 15 percent on 43 goods and services.

To date, the government advisory council has approved the hike, but the ordinance is yet to be officially published.

Hasan emphasised that the government's move to raise VAT from 5 percent to 15 percent, coupled with an existing 10 percent supplementary duty, would result in a cumulative 25 percent tax burden on consumers.

"Such a steep increase is unrealistic and burdensome, especially for the general public," he added.

The restaurant sector, already grappling with a 30 to 40 percent decline in business due to prolonged high inflation, fears the increased tax burden will further erode consumer spending.

Hasan criticised the government's approach, arguing it disproportionately favours large businesses while ignoring the challenges faced by small entrepreneurs.

He noted that a prior reduction in VAT from 15 percent to 5 percent had resulted in a 19 percent increase in VAT collection, as reported by the National Board of Revenue (NBR) chairman.

"Reversing this policy could harm both businesses and revenue collection," he said.

The association expressed willingness to collaborate with the NBR to ensure comprehensive VAT registration across the sector.

"Still, nearly 70 percent of restaurants remain outside VAT coverage," said Hasan.

Currently, of the 525,000 VAT-registered entities, only 300,000 regularly contribute, according to the BROA.