Import Duty

(Bangladesh)

Import Duty:

Import duty is a tax collected on imports and some exports by a country's customs authorities. It
is usually based on the imported good's value. Depending on the context, import duty may also
be referred to as customs duty, tariff, and import tax or import tariff.

For imported goods into Bangladesh, shipping agents submit their manifest data (containing
description of imported goods by ship) electronically to the Customs authority. Once the Import
General Manifest (IGM) is submitted online, the nominated C&F Agent (or the importer himself)
completes the goods declaration (popularly known as Bill of Entry or B/E) from their own
premises and submits the goods declaration to Customs systems through ASYCUDA World. The
declaration or B/E has to be made in a specific format, known as Single Administrative
Document (SAD).

The Prescribed Bill of Entry and Bill of Export Form Order, 2001 issued by the NBR outlines the
documentary submission requirements. For release of goods from Customs,

Following documents need to be submitted along with the declaration for all types of
imports:

Letter of Credit (L/C).

Invoice

Bill of Lading/AWB/Truck Receipt/Railway Receipt

Packing List

“Country of Origin” Certificate (except coal and export oriented garments industries)

Insurance policy/cover note

VAT/BIN Certificate

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Following additional documents are required for different types of goods, such as:

A certificate from the BSTI is necessary to clear 55 items for which BSTI certification is
mandatory, as per Import Policy Order, 2015-2018 Para 26(28), if the import consignment does
not have a certificate from an accredited laboratory in the exporting country.

Radioactivity test report from the concerned authority of the exporting country for food items
(Import Policy Order, 2015-2018 Para 16).

Clearance certificate(s) from the Bangladesh Atomic Energy Commission for food items to the
effect that the radioactivity level found in the imported food-stuff is within the acceptable limit.

Pre-shipment Inspection test report for milk food products and powder milk, coal and hard coke,
Break Acrylic (HS 39.15 and 3915.90), M.S. Billets (7207) and for items where the value of a
single item authorized for import by public sector agencies is Taka fifty lac or above.

Approval letter of the Chief Inspector of Explosives of the Ministry of Power, Energy & Mineral
Resources for import of explosives (Import Policy Order, 2015-2018 Para 26).

Copy of intellectual property certificate (attested by the IPR holder of the branded goods) in the
case of import of branded goods registered under any law related to IP in Bangladesh [Para 5(6)
of Import Policy Order, 2015-18]

Once the duties and taxes are assessed by Customs, the importer (or his C&F agent) pays duties
and taxes. On payment of duties and taxes assessed, Customs issues release order for clearance
and after completion of port formalities, goods are cleared.

Samples valued up to US $100 and weighing up to 5 kg is cleared (through manual system)

same-day (in Dhaka Air freight) if the consignee authorizes duty and tax to be billed to the
shipper on the Air Waybill. Samples valued over US $100 and weighing more than 5 kg will
require formal clearance through ASYCUDA WORLD system.

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It is to be noted that for the customs clearance of imported animals, plants and plant products,
quarantine conditions (such as certification from quarantine, fumigation etc.) shall have to be
observed. Fumigation is mandatory in case of import of raw cotton produced and packed in
Western Hemisphere.

If an import consignment is not cleared within 21 days (of the date of unloading at a Customs
airport) or 30 days (of the date of unloading at a customs-port or a land customs station or
customs-inland container depot), or within the extended time as the appropriate officer may
allow, the consignment may be disposed of through auction [Section 82 of the Customs Act
1969].

In cases, where it is not possible immediately to assess customs-duty that may be payable on any
imported goods for the reason that the goods require chemical or other test or a further enquiry
for purposes of assessment, or that all the documents or complete documents or full information
pertaining to those goods have not been furnished, Customs authority may assess the
consignment provisionally. In such cases, the importer (except goods entered for warehousing)
needs to furnish unconditional bank guarantee/security deposit of an amount (as deemed
sufficient by Customs) from a scheduled bank for the payment of the excess amount of duty that
may be payable after the final assessment. In this case, the final assessment has to be completed
within a period of 120 working days from the date of provisional assessment.

Bangladesh – Customs and Import duty tax calculation method:

Customs Duties or Import duty and taxes will be pending and need to be cleared while importing
goods into Bangladesh whether by a private individual or a commercial entity. The
valuation method is CIF.

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Below table provide the Duty and Sales tax for Bangladesh:

Duty Rates Sales Tax(GST) Threshold on goods

Duty will be exempted if
Duty will be VAT=15% VAT=VAT%(CIF FOB is less than
applicable + Duty + supplementary duty+ regulatory duty) BDT1000, but no
threshold for VAT

 Supplementary duty = (0% and 500%) * (CIF + corresponding duty.))

 Regulatory duty = 5% (CIF + corresponding duty + supplementary duty.)
 Advance Income Tax = 5% (CIF + corresponding duty.)

Bangladesh Customs:

Bangladesh Customs is the principle customs agency of Bangladesh.

History:

Bangladesh Customs was formed under the National Board of Revenue in 1972 after the
Independence of Bangladesh through the Customs Act In 2016 Bangladesh Customs joined
Operation IRENE to stop illegal trafficking of small arms and drugs.

Organization structure:

Customs is one of the three tax collecting agencies that work under the National Board of
Revenue. The other two agencies are VAT and Income Tax. The Customs wing is responsible

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for planning, formulation, implementation, and periodic review and re-appraisal of policies on
matters related to Customs. Its main functions are:

 Collection of duties and taxes at the import stage,

 Protection of domestic industry,
 Trade liberalization,
 Facilitation of trade,
 Prevention of smuggling,
 Interdiction of prohibited goods, narcotics and objects detrimental to national security,
and
 Prevention of money laundering.

Customs wing monitors the activities of Customs stations, and provide directions and
interpretations to field offices. Offices under the Customs wing implement the policies
formulated by the NBR, collect duties and taxes at the import stage, apply relevant laws and
regulations formulated by other border agencies, and ensure facilitation of trade. There are six
Custom Houses (Chittagong, Dhaka, Mongla, ICD Kamalapur, Benapole and Pangaon), two
Customs Bond Commission rates (Dhaka and Chittagong), one Customs Intelligence and
Investigation Directorate, one Customs Valuation and Internal Audit Commissioner ate and a
number of functional land Customs stations.

While Chairman is the apex decision making authority in the NBR, the basic functions of the
Customs wing are supervised by four Members. These positions are:

(i) Member (Customs: Policy);

(ii) Member (Customs: Export, Bond and IT);

(iii) Member (Customs: Audit, Modernization and International Trade); and

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(iv) Member (Customs: Administration)

Intelligence branch:

Bangladesh Customs has an intelligence division, responsible for preventing smuggling and tariff
evasions. In 2016 it started operations to recover cars bought and sold in Bangladesh evading
taxes, the cars were bought in by foreign officials working in International agencies such as the
World Bank and various agencies of the United Nations.

Bangladesh - Import Tariffs:

The Import Policy Order is the primary legislative tool governing customs tariffs. Tariffs are a
significant source of government revenue, which greatly complicates efforts to lower tariff rates.

Bangladesh levies tariffs at four primary levels of imported goods, and publishes the applied
rates here. Generators, information technology equipment, raw cotton, textile machinery, certain
types of machinery used in irrigation and agriculture, animal feed for the poultry industry, certain
drugs and medical equipment, and raw materials imported for use in specific industries are
generally exempt from tariffs. Samples in reasonable quantity can be carried by passengers
during travel and are not subject to tariffs; however, samples are subject to tariffs if sent by
courier.

The average Most Favored Nation (MFN) tariff rate is 15.5 percent, with average rates for
agricultural products higher than for industrial goods. The maximum MFN applied rate is 25
percent. Products subject to rates of from 5 to 25 percent include general input items, basic raw
materials, and intermediate and finished goods. Bangladesh provides concessions for the import
of capital machinery and equipment, as well as for specified inputs and parts, which makes
determinations of tariff rates a complex and non-transparent process. Other charges applicable to
imports are an advance income tax of 5 percent; a value-added tax of 5 to 15 percent, with

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exemptions for input materials previously mentioned; and a supplementary duty of 10 to 150
percent, which applies to luxury items such as cigarettes and perfume.

Bangladesh has abolished excise duties on all locally produced goods and services, with certain
exceptions. For example, services rendered by banks or financial institutions are subject to a tax
on each savings, current, loan or other account with balances above defined levels, and certain
taxes apply to airline tickets.

Top 20 Products Imported by Bangladesh:

# Product Trade Value (thousands)

1 Woven Cotton Fabrics > 85% > 200 G/M2 419,799
2 Woven Cotton Fabrics - > 85% < 200G/M2 388,272
3 Palm Oil 366,908
4 Cel Phones, Video Recorders & Radio Transcievers 328,529
5 Cane Sugar 294,505
6 Wheat 268,071
7 Television, Radio & Assessory Parts 247,367
8 Knitted & Crocheted Fabrics 210,147
9 Synthetic Staple Fiber Yarn 178,614
10 Machines For Preparing Fibers & Yarns 171,552
11 Cement 163,113
12 Woven Fabric of Synthetic Filament Yarn 162,835
13 Electric Generating Sets & Rotary Converters 150,574
14 Washers & Dryers 143,623
15 Woven Cotton Fabrics - < 85% < 200G/M2 138,479
16 Cotton Yarn - > 85% 137,090
17 Sewing Machines 135,016
18 Woven Fabric -Under 85% Synthetic > 170G/M2 134,742
19 Passenger Vehicles 129,996
20 Iron & Steel > 600 mm Wide - Hot 119,535

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Top 20 Import Countries:

Year 2016-2017

Sl No Major Countries
1 China People's Republic (P.R) 80649.0
2 India 48662.2
3 Singapore 19369.8
4 Japan 13726.8
5 Korea, Republic of 10107.2
6 Brazil 9331.7
7 Indonesia 9107.7
8 United Sates of America (U.S.A 8966.2
9 Malaysia 8356.2
10 Hong Kong: SAR of China 7223.9
11 Germany 6663.5
12 Thailand 6187.3
13 Taiwan: Province of China 6147.4
14 United Arab Emirates (U.A.E) 6134.7
15 Australia 5491.8
16 Saudi Arabia 5404.4
17 Canada 4849.6
18 Kuwait 4481.8
19 Italy 3823.4
20 Pakistan 3694.5
21 Other Country 51544.2
Total 319923.3

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Customs valuation basis:

Specific duty rates are based on net weight.

Ad valorem duties are based on value assessed as follows: CFR value, plus insurance fee (1%)
and landing charge (1%).

The dutiable value will be determined by Customs based on the importer's declaration.

According to the WTO Valuation Agreement there are six acceptable methods of determining
Customs value. Typically the first method is used (unless the buyer and seller are related parties).
When the value cannot be obtained this way, or is rejected by Customs, one of the other methods
is to be used, in descending order:

 Transaction value (the price actually paid or payable by the importer, plus certain costs
and expenses)
 Transaction value of identical goods
 Transaction value of similar goods
 Deductive value (the sale or resale value, reduced by certain costs such as customs duties,
taxes, and commissions)
 Computed value (calculated by adding together certain costs/values for production,
materials, profit and other expenses)
 Fall-back method (based on reasonable means consistent with the principles of GATT
and on the basis of available data)

General import license/permit requirements:

Most goods do not require an import license. The Ministry of Commerce requires registration of
each importer. Prior approval is required to import restricted goods. Certain restricted goods may
be imported only by authorized users. There are no tariff quotas on imports.

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Foreign exchange controls and letters of credit:

Unless otherwise specified, all import transactions, as a rule, are made by opening an Irrevocable
Letter of Credit. Exceptions are specified in the Bangladesh Import Policy Orders.

As importer submits Letter of Credit Authorization Form (LCAF), together with required
documents to open L/C, Bank will authenticate the LCAF, confirming:

 International Reply Coupon (IRC) is valid, renewal fee paid (if required)
 Item to be imported is eligible as per import policy/Pass Book
 LCAF is duly filled in & signed by the importer
 HS Code (Harmonized System Code) is inserted into LCAF

The Bank will endorse value with particulars and Bangladesh Taka [৳] equivalent on back of
exchange control copy of LCAF. Importer is required to have Letter of Credit Authorization
(LCA) forms.

Foreign exchange is controlled by the government through the central bank, which administers
foreign exchange control through authorized commercial banks and financial institutions.

Conclusion:

Although it has made significant reforms in the past few years, Bangladesh remains one of the
most restrictive trade regimes in Asia and gets a major portion of its current revenue from import
duties and excise taxes. In 1999, tariff reform was accelerated by the compression of customs
duty rates into a range of 0–37.5%, including a variety of products from raw materials to finished
products. There is also a 2.5% infrastructure development surcharge on nearly all imports.
Customs procedures are lengthy and burdensome and Bangladesh's list of prohibited imports is
lengthy.

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