Rising import taxes

The import-related taxes in Bangladesh have become increasingly complex and higher. The standard Value Added Tax (VAT) is around 15 per cent, but importers also pay Customs Duty (CD) ranging from 5 per cent to 25 per cent depending on the product category. Supplementary Duty (SD) can go up to 40 per cent on non-essential items, while Regulatory Duty (RD) is around 3 per cent, further increasing costs. Besides an Advance Income Tax (AIT) of about 5 per cent, total taxes on selected imports may exceed 50-60 per cent of the product's base value, significantly increasing import costs compared to earlier years.

There are several reasons behind the increase in import taxes in Bangladesh. The government aims to raise domestic revenue as international financial support declines following the country's graduation from LDC status. Higher taxes are also designed to protect local industries and encourage domestic consumption. Moreover, import controls are being tightened to manage foreign exchange reserves by discouraging luxury imports. These fiscal measures have also been influenced by global economic pressures such as inflation and volatile exchange rates. Recent global conflicts have disrupted supply chains and increased prices of fuel, food, and shipping, resulting in higher import costs, inflationary pressure, and strain on Bangladesh's foreign currency reserves.

Rising import taxes are affecting the economy, particularly businesses, significantly. Higher input costs are squeezing profit margins in import-reliant sectors such as manufacturing, retail, and construction, potentially leading to higher consumer prices. Small and medium enterprises (SMEs) are especially vulnerable, as they have less financial flexibility, while larger companies can adjust by restructuring supply chains. Ultimately, consumers bear the burden, as price increases reduce purchasing power and affect overall economic demand.

In conclusion, the rise in import taxes in Bangladesh is part of a broader economic strategy to strengthen local industries, increase government revenue, and enhance global competitiveness. While these measures may bring long-term benefits, they also create short-term challenges for businesses and consumers. As Bangladesh moves into a new phase of development, striking the right balance between protective tariffs and economic transparency will be key to ensuring sustainable growth.

Sabina Ansary Reshmee

Dhaka

sabina.reshmee@northsouth.edu