Govt further squeezes imports

Taxes on a slew of commodities, including fresh fruits, flowers and cosmetics, set to rise

| Updated: August 05, 2022 15:09:09

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Taxes on a slew of commodities are set to increase as the government further squeezes imports under crunch-time austerity to mitigate pressure on Bangladesh's foreign-exchange reserves.

Officials say that, attuned to the government austerity measures, the revenue board again moves to curb import with prohibitive taxes.

An array of 135 products, which mostly faced enhanced Regulatory Duty (RD) once last May, may see the highest rates of taxes up to 50 per cent, the sources add.

The customs authorities are learnt to have made the move again following instructions spelt out by government high-ups in a bid to ease pressure on the foreign-exchange reserves, as imports entail high costs following global price rises.

On May 24, the customs authorities ratcheted up the import taxes to 20 per cent.

Again, the customs wing of the National Board of Revenue (NBR) is going to jack up the duty, in some cases to the highest level up to 50 per cent, in a bid to rein in import of the items categorized as less important.

The NBR has sent a draft list of the products to the Ministry of Finance (MoF) for its approval, the sources said.

On the hike list are products that include fresh fruits and flowers, cosmetics, and furniture.

In an analysis of the customs data it has been found that apple and orange imports are among the top 20 import items of the country in terms of foreign-currency payments.

Last year, import value of apples was Tk 11.25 billion while orange Tk 12.83 billion.

The government received Tk 8.71 billion and Tk 9.72 billion in import taxes from apple and orange respectively.

In the financial year 2021-22, import of grapes costs Tk 8.91 billion, generating Tk 7.0 billion in tax revenue, data reveal.

However, the country has a wide range of seasonal fresh fruits with varied tastes.

Officials say the NBR has made the move again "in the wake of a global financial and commodity-supply-chain crises as well as continuing depreciation of the local currency against the US dollar".

As per the Customs Act 1969, the NBR is empowered to impose regulatory duty without parliament's consent, in order to deal with exigencies.

Imposition of other types of duty such as Customs Duty and Supplementary Duty (SD) on any product after budget session is not possible for customs department, the officials add.

Import products that are subject to 25-percent CD are automatically also bound to pay at least 3.0-per cent RD under the customs act.

The NBR can impose RD up to 50 per cent on a product.

According to customs tariff lines, a total of 3,408 products are subject to payment of RD in import stages.

"Although there are high duties on the items categorized as non-essential and luxury items, still the fresh duty would be imposed considering the current situation," says a senior government official.

On May 19, Prime Minister Sheikh Hasina instructed the commerce ministry, the finance ministry and the central bank to come up with comprehensive measures within two to three days against the volatile dollar market and skyrocketing commodity prices.

Country's foreign-exchange reserves dropped to around $39 billion for increase in import-payment requirements from $48.04 billion in August last calendar year.

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