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Budget for upcoming fiscal year 2024-25
SD, RD on nearly 300 items may go
BD graduation requirements, WTO strings
DOULOT AKTER MALA | Tuesday, 4 June 2024
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Import taxes on nearly 300 goods may be bundled out in the upcoming fiscal year in preparation for Bangladesh's graduation to middle-income country that presupposes tariff rationalisation.
Officials in the revenue board have said Supplementary Duty (SD) on some 191 while Regulatory Duty on 91 imports would be waived in the budget for the 2024-25 financial year -- a fiscal measure that may have cooling impact on prices but toughen competition for domestic producers.
As per World Trade Organization (WTO) rules, the National Board of Revenue (NBR) may bring 10 products under bound tariffs.
Bound tariff is the maximum MFN tariff level for a given commodity line. When countries join the WTO or when WTO members negotiate tariff levels with one another during trade rounds, they make agreements about bound-tariff rates, rather than actually applied rates, according to the World Bank.
Customs officials say some of sectors like powdered-milk packaging have faced 'illogical' tariff protection for long and may face higher taxes.
Currently, the tax incidence on the import of two-and-a-half-kilogram powdered milk is a steep 89.32 per cent while it's 10 per cent with total tax incidence of 37 per cent for bulk import.
To minimize such large tax gap, the NBR may withdraw the 20-percent SD on import of two-and-a-half-kilogram packet of powdered milk, helping a cut in protective duty difference to 21 per cent between bulk and package imports.
Shelled cashew nut may see 5.0-percent CD and 10-percent RD in the upcoming fiscal year.
Currently, local raw cashew-nut-processing industries are facing uneven competition as finished cashew nut is being imported under SAFTA benefit at 3.0-percent duty.
Large business groups such as BSRM have already established large plants to process raw cashew nuts in the country.
Alihussain Akberali, chairman of BSRM, says it will help local cashew-nut-processing industries to grow in future.
"Bangladesh has a good potential in this and needs to nurture industry for a few years to help it grow," he adds.
The new duty structure will help protect local industries and generate more employment, he says.
In the budget, the customs authority would keep zero-rated customs duty on import of major food items, fertilizers, seeds, life-saving medicines, cotton and some other industrial raw materials.
Excepting the items, all other goods belonging to zero-rated duty would see 1.0-percent CD or above.
Officials have said a number of goods may not be able to enjoy 1.0-percent concessionary import taxes as capital machinery.
However, the six-tier CD and 12-tier SD may remain unchanged.
The NBR has selected the goods for SD and RD waivers which are not luxury items, will not create any pressure on country's forex reserves, are not produced in the country and have less demand in the country's cultural context.
Locally produced goods would be able to compete with the similar types of import goods despite reduction in SD and RD, the sources say.
Import taxes on sardines and mackerel fish may go up to 58.60 per cent from the exiting 33 per cent to check misdeclaration.
The tax incidences on chocolates and other food preparations containing cocoa may be cut down to 89.32 per cent from 127.72 per cent to check "false declaration" meant for evading duty taxes by showing it 'food supplement'.
Mythanol or Mythail alcohol, raw materials for medicine, wood varnish, washing plant, paint, particle board, and venial board may see import taxes cut to 5.0 per cent for repackaging instead of existing 10 per cent.
Import of raw materials Purified Terephthalic Acid (PTA) and Mono-ethylene Glycol (MEG) for Polyester (synthetic staple fibre and pet chips (textile grade) may see lower import taxes-only 1.0 per cent in a deep cut from the existing 25 per and 10 per cent.
For import of raw materials for local carpet manufacturers, the NBR may halve import taxes on polypropylene yarn to 5.0 per cent from exiting 10 per cent.
Iron, non-alloy steel wire import may see a higher import taxes to 43 per cent from exiting TTI 37 per cent.
Import of manganese, needed for manufacturing Ferro alloy, might be cheaper with a tax cut to 5.0 per cent, TTI would be 31 per cent from existing 37 per cent.
For aviation sector, the NBR may waive VAT on import of aircraft engine and propeller.
Import taxes on compressor of air conditioner and refrigerator may be hiked to 10 per cent from the exiting concessionary rate of 5.0 per cent. Also, a minimum value $40, 65, 50 and 85 might be fixed for import of compressor of a kind used in refrigerator, without inverter, with inverter technology, compressor of a kind used in air conditioner, compressor without inverter, compressor with inverter technology.
Import taxes on chiller (50 tonnes and above) used for spinning, dyeing, printing and finishing mills may see a tax cut to 10 per cent waiving 5.0-percent advance income tax and advance tax.
For water purifier, used in household, import taxes may go up to 15 per cent from existing 10 per cent and their TTI would go down to 37 per cent.
Taxes on import of laptop would go down to 20.50 per cent from exiting 31 per cent. Minimum taxes on import of switch socket and spinal needle may go up.
Import of ambulances may be tougher as the customs detected abuse of the reduced duty facility.
The customs would define passenger-cabin length exceeding nine feet if importers of ambulance want to enjoy a reduced tax benefit on import.
The NBR may offer concessionary duty facility on import of electric motor cars
Total import taxes on import of furnace oil, lube oil and base oil would remain unchanged while minimum value for the items might be set to $ 480 for furnace oil, $1200 for base oil and $3000 for lube oil mineral.
Minimum value for import of cotton fabrics, printed cotton fabrics, synthetic fabrics may go up while import of dengue-detection kits may enjoy concessionary duty.
In the upcoming FY, the government has set a Tk 1.10-trillion target for import-tax collection. Still, import taxes contribute 29 per cent of total tax revenue of the government.