Orsaline taxed at 98pc in BD

Oral saline is taxed at above 98 per cent in Bangladesh now due to the inclusion of its prime packaging material on a high import tariff list.

Local manufacturers say that changes in HS code by the customs authority have led to the hike in the tax rate by 58 per cent since 01 March 2023 on the aluminum foil of the widely-consumed product.

The total tax incidence on Orsaline was 31 per cent earlier. However, the aluminum foil for Orsaline packaging was completely exempted from import taxes.

Now, manufacturers have to pay customs duty at 25 per cent, previously 5.0 per cent.

Also, a fresh supplementary duty at 25 per cent and regulatory duty at 3.0 per cent have also been imposed on the aluminum foil used for packaging of Orsaline.

Industry insiders say the product is under the 'blacklist' of the Directorate General of Drug Administration (DGDA) as essential drugs and entitled for enjoying tax exemption.

Complexities over defining the HS code have also been resolved after local manufacturers have obtained certification of the BCSIR.

Local manufacturers said it would be difficult to supply the product at one of the lowest prices at Tk 6.0 per sachet in the world if such a high tax remains in place.

Bangladesh has among the world's highest uses of ORS, which was 84 per cent in 2014.

"The packaging material is only used for oral saline and is an essential item considering its widespread consumption across the country," writes Bangladesh Association of Pharmaceuticals Industries (BAPI) at the National Board of Revenue (NBR).

In a recent letter, signed by BAPI secretary Ziaul Huq, the pharmaceutical companies requested the customs authority to include the product under the duty-exempted product list in the Statutory Regulatory Order (SRO).

Currently, SMC is the major supplier of oral saline while Renata, ACI, Acme and Popular Pharma are mainly contract manufacturing through having small-scale supply by their own.

Abul Bashir Khan, chief financial officer of SMC enterprise Ltd, said the packaging material 'PE Film combined with PET aluminum dust' has local production too, but its prices are much higher than that of the imported ones despite a tax hike.

Safiul Azam, director (finance and accounts) of Popular Pharmaceuticals, said the customs authorities considering aluminum foil as polythene item imposed heavy tax by changing HS code last year.

Orsaline has a seasonal effect on its sale as it is now issued for dehydration rather than diarrhoea.

Talking to the FE, a senior customs official said the major part of aluminum foil is made of polythene which falls under the HS code having higher taxes.

He said the manufacturing price of orsaline may go up a maximum of Tk .70 with the change in HS code.

In an examination at chemical laboratory of Chattogram Customs House, the customs authority has found 22 per cent aluminum, not aluminum alloy, to enjoy concessionary tax rate.

However, the manufacturers have obtained certification of Bangladesh Council of Scientific and Industrial Research (BCSIR) where analysts found 45.8 per cent aluminum, 54.2 per cent polyethylene and 0.03mm polythene.

The BAPI said the items under Block List category of DGDA entitled for the duty-free import. However, other items under the block list have been enjoying the exemptions except the packaging material of oral saline.

Last year, manufacturers of Orsaline, including SMC Renata, popular, held meetings with the NBR to discuss the HS code issue.

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