A state agency has suggested exemption of supplementary duty (SD) on the import of raw materials for colour cosmetics and skin care items to help the infant cosmetics industry prosper.
It has also recommended determining a specific duty on per kilogram of colour cosmetics.
The Bangladesh Trade and Tariff Commission (BTTC) has recently submitted the recommendations to commerce ministry regarding the issue.
Currently, the local annual demand for color cosmetics and skin care items is of Tk 130 billion and Tk 210 billion respectively, according to the BTTC document.
In case of the import of each lipstick, the net weight of each imported lipstick is 3.5-4.0 gram. Accordingly, the number of lipsticks imported is 250 to 300 pieces.
The tariff value of per-kilo lipsticks set by the government is $10, meaning that producers have to pay $10 for 250-300 lipsticks, reads the document.
According to price declaration and import prices of ordinary and premium-quality lipsticks, the amount of SD paid on commercially imported standard lipsticks is Tk 2.90 apiece, while Tk 18.68 for a locally made one.
Supplementary duty is Tk 5.80 on each non-commercially imported high-quality lipsticks, while it is Tk 82.71 on the locally produced ones.
Besides, in case of the payment of VAT (value-added tax), the amount of VAT paid on imported standard lipstick is Tk 10.74 apiece.
On the other hand, Tk 30.82 has to be paid in case of each locally produced lipstick.
Commercially imported high-quality lipsticks are subject to the payment of Tk 44.16 in VAT, while it is Tk 136.76 for locally produced ones.
According to existing VAT and SD structure, local producers are paying VAT and SD at a rate higher than what importers pay.
The local infant industry will develop if the existing structure is modified and protection is provided through exemption of SD on local production for a specific period. Besides, as an import alternative, the amount of VAT that will come from the local production will be more than expected.
When contacted, a commerce ministry official said, "We have received a set of recommendations from the BTTC and are currently working on the issue."
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