Car importers demand withdrawal of discriminatory taxes

Reconditioned car businesses Tuesday said they are facing uneven competition with importers of new cars due to faulty customs valuation system which is also causing revenue loss to the government through frequent under-invoicing. The businessmen have sought introduction of fixed value system on the basis of seat capacities of both old and reconditioned cars. They also demanded allowing of depreciation on year-basis for reconditioned vehicles. Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA) leaders proposed the measure in a pre-budget meeting with the National Board of Revenue (NBR). They said new cars have been the majority in the list of imported cars in the current fiscal due to the existing customs valuation policy. Reconditioned car importers said nearly 68.5 per cent of the cars imported in July-February period of the current fiscal were new ones and the rest were reconditioned. A total of 31,729 new cars and 14,647 reconditioned cars have been imported in the current fiscal. They said the customs fixes the assembly value on the basis of yellow book prices for reconditioned vehicles, but assembly value of majority of the new cars of same categories is almost half of that of reconditioned cars. "It is surprising that reconditioned cars have to pay duty taxes double that of new cars," said BARVIDA president Abdul Mannan Chowdhury Khusru. Duty of a new 1500 cc Sedan car is now US$8270 while it is $17550 for a reconditioned or old Sedan car of same engine capacity. Reconditioned cars always met 95 per cent of the demands of car, but it is facing uneven competition due to absence of a balanced revenue (taxation) policy, he said. "The government should fix identical duty irrespective of new and reconditioned cars and allow year- wise depreciation for reconditioned cars," he added. The BARVIDA has conducted a study in the neigbouring countries to know their assembly value system. It has found that Pakistan and India are offering depreciation for reconditioned cars at maximum 50 per cent and 70 per cent respectively. The Association has sought depreciation facilities for reconditioned cars according to quoted rates of Japan Auto Appraisal Institute (JAAI). The BARVIDA president said a section of new car importers, excepting Honda company, has been evading millions of dollars of duty-taxes through under-invoicing. Giving reference to other countries' initiatives to check duty-evasion, the reconditioned car importers said the method of fixed value, irrespective of new and old cars, can thwart the practice. The car importers also claimed that depreciation of dollar and yen also caused price hike of reconditioned vehicles. They also said higher duty structure caused increased import of luxury jeep through 'CARNET', a special facility for foreign investors. In the budget of current fiscal, the government slapped tax ranging from 432 to 805 per cent on cars with engine capacities of 2750 cc to 4000 cc. BARVIDA leaders also demanded waiver of duty on import of microbus up to 2000 cc as a multipurpose vehicle. Under the current tax structure, a 1800 cc microbus has to pay 30 per cent duty while 1801-2000 cc microbus 60 per cent duty.