The Beauty Service Owners Association of Bangladesh has requested the government to reduce the value added tax (VAT) rate to 5% from the existing 15% on beauty parlours, spas, and salon industries, affected by the Covid-19 epidemic.
In a letter to the commerce ministry, Kaniz Almas Khan, president of the association, said the unfavourable existing VAT system and the epidemic have created a fragile situation in the sector, and many beauty services have already closed down and become heavily indebted.
It has become difficult for the industry to sustain itself as the number of customers has fallen drastically following the closure of various social and cultural events, including weddings, amid the epidemic. Covid has created a deep crisis in the sector and entrepreneurs have their backs to the wall, she added.
The letter sent on 23 January to Tapan Kanti Ghosh, senior secretary at the Commerce Ministry, said beauty service companies carry out their businesses on rented city premises in important places, paying a huge amount of rent. Due to these premises being rented housing, there is no VAT exemption for gas, electricity, water, internet, etc.
Moreover, beauty parlour companies do not get a rebate against VAT paid at the source when purchasing various materials used in parlours from different suppliers. As a result, the industry has to pay VAT at the rate of about 25%, which conflicts with the basic VAT principles.
Furthermore, the current budget has increased duties on cosmetic imports by 15%, so the cost of services has also gone up, he added.