The National Board of Revenue (NBR) has decided to increase the limit of paid-up capital for taxicab business, and relax the limits of engine capacity in a bid to encourage investment in this sector.
The Customs Wing of the board is set to increase the ceiling of paid-up capital to Tk 25 million from Tk 1.0 million to allow businesses to import cars as taxicab enjoying the reduced tax benefit.
The wing will also reduce the cc limit of the cars to 1485 cc from the existing 1500 cc to make it consistent with the taxicab guidelines of the communications ministry.
NBR is set to issue a Statutory Regulatory Order (SRO) in a short time with the changes in the existing rules for taxicab business.
A senior Customs official said the existing SRO has been framed in 2009 which needs to be updated in the present context.
Importers will be able to import cars as taxicab enjoying the reduced customs duty, upon complying with the conditions, he said.
According to the existing Customs rules, importers of taxicabs enjoy a reduced rate of 20 per cent import duty, including customs duty (CD), supplementary duty (SD) and regulatory duty (RD).
The official said the Customs Department has waived all import duties above 20 per cent on import of taxicabs to facilitate the sector.
Private or public limited companies having Taxpayers Identification Number (TIN) and minimum paid-up capital worth Tk 25 million will be entitled to import cars as taxicab. However, the imported cars will have to be registered as 'taxicab' in the name of the importing company or the financing bank or leasing companies.
The importing company, the banks or the leasing companies have to give a guarantee to the customs authorities on the payment of entire tax/duty in case of abuse of the tax benefit.
Customs officials said importers of reconditioned cars were paying 131 per cent tax/duty currently.
Actual tax benefit for taxicab importers is around 65 per cent compared to that of the commercial importers of used cars, they added.
Customs rules allow import of 10 taxicabs at a time in a consignment. Importers have to give an 'assurance letter' on not using the taxicab for other purposes.
Under the rules, the customs authorities will have to send the relevant documents directly to Bangladesh Road Transport Authority (BRTA) for registration. However, BRTA will not be able to re-register a taxicab as private car without approval of the customs wing.
Taxicabs can be re-registered as private cars upon fulfilling some conditions including minimum eight years' plying on the roads from the date of registration, through payment of 20 per cent of the actual import taxes that have been enjoyed for importing a taxicab. The Customs Act has also incorporated penal provision for abuse of the tax benefit by not complying with the conditions.
Some 47 taxicabs started to ply the city roads from April 14 last. Army-run Trust Transport Services and Toma Group have launched the services with the taxicabs having engine capacities ranging from 1500 cc to 2000 cc.
Talking to the FE Sunday, Chief Executive Officer (CEO) of Toma Group Mustafa Kamal said the taxicabs should be allowed in the higher cc slab to encourage use of quality cars.
Higher engine capacity can ensure comfortable journey by taxicabs, he added.
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