The Association for Private Universities of Bangladesh today said the government's recent imposition of a 15 percent income tax on private universities may result in the closure of some institutions, severely limiting access to higher education for students.

In a statement, they said private universities that rely solely on student tuition fees without government grants are already burdened with various taxes, including VAT on salaries, educational materials, and campus construction.

Despite these challenges, they allocate remaining funds from tuition fees towards activities benefiting students and faculty, such as improving education quality, supporting research, and expanding campus facilities.

The Covid-19 pandemic has exacerbated financial strain on private universities, with decreased enrolment and operational limitations, the statement reads.

The additional 15 percent income tax threatens to push them beyond it.

However, even before the full legal implications of the tax are settled, the National Board of Revenue (NBR) has begun sending tax demand letters to private universities. They even suspended university bank accounts, severely hampering their financial operations. This could result in delays in salary payments for staff and impact essential services for students, they said.

The association urged immediate government action to alleviate the crisis, calling for the withdrawal of bank account suspensions and delaying tax collection until legal issues surrounding the tax are resolved.

On February 27, the Appellate Division of the Supreme Court scrapped a High Court verdict that declared illegal the government orders which imposed a 15 percent income tax on private universities and private medical, dental and engineering colleges.

However, the full text of the apex court verdict and its observations are yet to be known.