Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
Local mobile phone manufacturers and assemblers are likely to face increased value-added tax (VAT) in the next fiscal year (FY2025-26), as the government plans to reduce certain facilities currently enjoyed by the sector.
Authorities argue that the measure aims to prepare the industry to become sustainable and competitive with imported alternatives.
According to officials at the Ministry of Finance, companies involved in surface-mount technology (SMT) and general assembly processes may see VAT rates rise to 10 per cent from the current 7.5 per cent.
Similarly, firms engaged in power circuit board (PCB) assembly, SMT processes, battery charger assembly, and general mobile phone assembly will face a VAT rate of 7.5 per cent, up from the existing 5 per cent.
Moreover, companies with more advanced capabilities-such as mobile housing manufacturing alongside PCB assembly-will be subject to a 4 per cent VAT, compared to the previous rate of 2 per cent.
Finance ministry officials stated that these revised rates will remain in effect for a two-year period, until June 30, 2027.
The mobile phone manufacturing and assembly industry had earlier received VAT exemptions under a policy introduced by the Internal Resources Division (IRD) through SRO (No. 229-AIN/2019/155-VAT), dated June 30, 2019.
This exemption was conditional on achieving a minimum threshold of local value addition.
Under the policy, companies assembling mobile phones locally were eligible for full VAT exemption if 30 per cent of the components were produced or value-added domestically.
Manufacturers importing partially finished devices in CKD/SKD condition also qualified for VAT exemptions if they met the prescribed local value-addition criteria.
Though originally intended as a temporary measure, the government extended the VAT exemption benefit until June 30, 2026, to encourage domestic investment, support import substitution, and foster technological advancement in the sector.
Speaking to The Financial Express, Rizwanul Haque, Vice President of the Mobile Phone Industry Owners' Association of Bangladesh (MPIOAB), said that 17 companies are currently involved in local handset manufacturing, with the capacity to meet domestic demand.
However, he noted that the local market is heavily dominated by grey handsets, unauthorised imported phones, due to inadequate surveillance and weak enforcement of import regulations.
"Grey handsets account for over 60 per cent of the market, while local manufacturers hold just around 40 per cent," he said.
Haque expressed concern over the proposed VAT hike, saying it may lead to a price increase for locally manufactured handsets, making them less competitive compared to grey market devices.
newsmanjasi@gmail.com