American imports getting cheaper under 500 products' duty cuts

Import taxes on nearly 500 products, including 100 from America, are up for cuts in the upcoming budget to smooth the path of Bangladesh's LDC graduation next year and offset Trump tariffs.

Of the items, some 500 goods will see cuts ranging from 20 to 40 per cent in supplementary duty and regulatory duty (RD) while customs duty (CD) would be reduced on 135 items, official sources said.

The items include fish, animal-based items, less-commonly-traded goods, and certain intermediate raw materials.

"We are going to waive CD on 100 items imported from USA to align the tariff rate with reciprocity as desired by the Trump administration," says one revenue official.

To phase out protective tariffs -- meant for providing protection to fledging domestic industries -- import duty would be increased up to threefold on raw materials of 14 manufacturing sectors.

Those coming under the tax hike include beverages, energy-saving bulbs, water purifiers, fans, cigarette paper, and food processing.

Officials say the 'minimum value' system would be phased out for what is dubbed trade parity as it doesn't exist in any countries across the world.

However, as per lending conditions set by the International Monetary Fund (IMF) on mobilising more revenues, the government would increase the fixed value on 24 items for next fiscal year.

To comply with World Trade Organization (WTO) regulations also, tariff values and minimum values are set to be removed for around 40 types of products.

Import duties on raw materials for 59 types of medicines, including those used for cancer treatments, may be withdrawn entirely.

Minimum value refers to a fixed government-declared price below which no product can be assessed for duty, regardless of the declared import price.

This system helps prevent revenue evasion through under-invoicing. However, according to WTO standards, both tariff values and minimum values are inconsistent with global practices.

Bangladesh currently imports around 7,500 genres of products (tariff lines based on HS codes), most of which face very high import tariffs. Over 100 of these imports are subject to tariff-and minimum-value assessments, which have been widely criticized.

Officials have said upon Bangladesh graduating from LDC status, the country will have to move away from such tariff structures. Currently, local industries benefit significantly from tariff walls (high protection), which are not aligned with global standards.

According to the National Board of Revenue (NBR), the average import tariff in Bangladesh is 28 per cent -- more than double the average for LDCs.

Beverages, energy-saving bulbs, water-purifying machines, electric fans, cigarette paper, food processing may come under higher import duty.

Malt extract, food preparations of flour, grouts, meal, starch, or malt extract for infant or young children in bulk, imported by the food industry, nutritional supplements for the food industry for pregnant and breastfeeding women, soya-protein-based food preparations, raw materials for water-purifying machine, woven fabrics of man-made fibers for satin ribbon manufacturing, too, may see a hike in duty taxes.

For beverage concentrates -- CD might be increased from 10 per cent to 15 per cent while import for cigarette paper for tobacco industry may see 100-percent SD in a hike from the existing 60 per cent. The customs duty on non-alloyed aluminum rectangular plates, sheets, and strips for electric-fan manufacturing might be increased to 5.0 per cent from 1.0 per cent.

To promote the local leather industry, the government is likely to reduce customs duty on several chemicals under seven HS codes, including chromium, wattle extract, and tanning extracts of vegetable origin.

Sulphate-import customs duty will be down to 5.0 per cent from 10 per cent. However, VAT at 15 per cent will be applicable to this item.

Specific duty on import of refined sugar is likely to come down to Tk 4,000 from Tk 4,500, supplementary duty on microbus import will be halved from per cent.

The government is likely to facilitate local manufacturing of computers by adding some accessories to the list of pared-down import duties.

Customs duty on bus import is likely to be cut to half at 5.0 per cent from the current rate of 10.

To protect the local abrasive paper industry, the upcoming budget is likely to reduce customs duty on its two major raw materials- Phenolic resins and sandpaper coating materials -- to 5.0 per cent and 15 per cent from the current rates of 10 and 25, respectively.

Steel-industry raw material mould powder is currently facing 25-percent customs duty and a 3.0-percent regulatory duty. The upcoming budget is likely to reduce this to 15% and waive the regulatory duty.

To promote fruit export, the government is likely to reduce customs duty from 25 per cent to 5.0 per cent on fruit-bag imports.

Helicopter import is likely to face a hike in customs duty from 0% to 10%, and 15% VAT, 5% Advance Tax and 5% Advance Income Tax from the next fiscal year.

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