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Border Taxation

Customs Duty: Customs act is primarily responsible for collection of all duties and taxes at the import stage. Apart from collection of government revenue it is also responsible for trade facilitation, enforcement of government regulations, protection of society and environmental protection, preparation of foreign trade statistics, trade compliance and protection of cultural heritage. Custom duty not only raises money for the Central Government but also helps the government to prevent the illegal imports and illegal exports of goods from foreign country. The Central government has emergency powers to increase import or export duties whenever necessary after a notification in the session of Parliament. Customs collects 42% of the NBRs total revenue. The revenue target for the year 2007-08 was Tk. 17,812 Cr. and actual revenue collection so far (July 07 to May08) is Tk. 16, 987.06 Cr. that is 19.04% higher than the previous year. The target has been revised to Tk. 19385 Cr. for 2007-08 and with an increase of 16.25%; it has been set to Tk. 22,536 Cr. for the year 2008-09. The customs authority is responsible mainly for assessment and collection of customs duties,

supplementary duty and other taxes and charges leviable on imported or

exported goods. Its collateral function includes prevention of smuggling, implementation of the Imports and Exports (Control) Act 1950, and the enforcement of the Foreign Exchange Regulation Act 1947. Duties and taxes collected on international trade now comprise the largest share of tax revenue in Bangladesh. More than three-fourth of total taxes comes from indirect taxes, about 70% of which is collected at customs-station. Customs duties represent about 30% of total tax or about 40% of indirect tax. However, due to tariff reduction after the signing of the World Trade Organization (WTO) Agreement, the share of customs duty in the tax structure has been falling in recent years. Custom Duties are usually levied with ad valorem rates and their base is determined by the domestic value 'the imported goods calculated at the official exchange rate. Similarly, export

duties are imposed on export values expressed in domestic currency. Export duties are levied occasionally to clear up excess profitability in international price of goods in respect of which domestic prices may be low at given time. But the concept of import duty is wide and almost universal, except for a few goods like food grains, fertilizer, life saving drugs and equipment etc. Since Customs functions at the gateway for import and export of goods, it plays a critical role in the import-export trade chain. In order to make customs procedures more transparent and to achieve more trade facilitation, a number of measures have been taken in past few years. With the introduction of ASYCUDA++ and Direct Traders Input (DTI) automation in customs clearance has begun. Recently, a full automation scheme is on way of implementation in collaboration with the Chittagong Chamber and the Task Force. Once the full automation is completed the importers and exporters will be able to access customs server from their offices or homes and will be able to submit their customs declaration online.

Objectives of Custom Duties The customs duty is levied, primarily, for the following purpose:

Restricting Imports for conserving foreign exchange. Protecting Industry from undue competition. Prohibiting imports and exports of goods for achieving the policy objectives of the Government.

Regulating export. Co-coordinating legal provisions with other laws dealing with foreign exchange such as Foreign Trade Act, Foreign Exchange Regulation Act, Conservation of Foreign Exchange and Prevention of Smuggling Act, etc.

Exemptions from Customs Duty: I) Capital machinery; ii) Raw materials of Medicine;

iii) Poultry Medicine, Feed & machinery; iv) Defense stores; v) Chemicals of leather and leather goods; vi) Private power generation unit; vii) Textile raw materials and machinery; viii) Solar power equipment; ix) Relief goods; x) Goods for blind and physically retarded people; and xi) Import by Embassy and UN.

Free import 200 cigarettes or 50 cigars or 225g of tobacco; Two bottles of alcoholic beverages or 1 bottle if not travelling for touristic purposes - only applicable to non Muslim travellers 250ml of perfume; Gifts up to the value of BDT500 Residents can import up to BDT 150 in local currency and an unlimited amount of foreign money. All visitors flying out of Bangladesh will need to pay an additional BDT 300 Embarkation Tax prior to leaving the country.

Prohibited Illegal drugs Arms, explosives and ammunition Knives and deadly weapons All imported goods in their original or unprocessed form; Ferrous and non-ferrous metals and scraps thereof; Petroleum and petroleum products except naphtha and furnace oil; Oil seeds and edible oils except Kapok seeds; Jute seeds and sun-hemp seeds; Food-grains including rice products and flour products; Milk and milk products; Gur and Khandesi sugar; Live animals all sorts, skins of animals and wildlife covered by the Bangladesh Wildlife except the species detailed in the first schedule of the said order; Maps and charts including the following: Unclassified maps of scale smaller than inch or 1/250,000 scale; Education and scientific charts; And Guide maps and relief maps. Beef, mutton and animal fats; Green coconuts, coconuts and copra; Rare items of archaeological interest; Human skeletons; Pulses; Eggs and poultry; Prawns and shrimps except frozen and processed; Features films not certified by the Bangladesh Film Censorship Board as fit for Export; Onion; Rice bran except de-oiled rice bran. Shrimp of count 71/90 and sizes below for seawater and 61/70 and sizes below for fresh water excluding two varieties;

Bamboo and cane in whole form and wood log; Counterfeit money and goods

Restricted All weapons can only be imported with permission from the ministry of defence. Import of Pharmaceutical raw materials and packing materials is subject to approval by the Director of Drugs Administration, Government of Bangladesh. For import of food items, animal, poultry feed special documents are required. All pets being imported into the country will require an import permit and a general health certificate clearing the creatures of Rabies and other infectious diseases. Textiles: law for textile imports requires a certificate of cleanliness. Imposition of countervailing duty: Where any country or territory pays, bestows, directly or indirectly, any subsidy upon the manufacture or production therein or the exportation therefore of any goods including any subsidy on transportation of such goods, then, upon the importation of any such goods into Bangladesh, whether the same is imported directly from the country of manufacture, production or otherwise, and whether it is imported in the same condition as when exported from the country of manufacture or production or has been changed in condition by manufacture, production or otherwise, the Government may, by notification in the official Gazette, impose a countervailing duty not exceeding the amount of such subsidy.

Imposition of anti-dumping duty: Where any goods are exported from any country or territory (hereinafter in this section referred to as the exporting country or territory) to Bangladesh at less than the normal value, then, upon the importation of such goods into Bangladesh, the Government may, by notification in the official Gazette, impose an anti-dumping duty not exceeding the margin of dumping in relationto such goods.

Imposition of safeguard duty: If the Government, after conducting such enquiry as it deems fit, is satisfied that any article is being imported into Bangladesh in such increased quantities and under such conditions that such importation may cause or threaten to cause serious injury to domestic industry, it may, by notification in the official Gazette, impose a safeguard duty on that goods. Drawback Duty: Subject to the subsequent provisions of this Chapter and the rules, when any goods, capable of being easily identified, which have been imported into Bangladesh and upon which customsduties have been paid on importation, are exported to any place outside Bangladesh or as provisions or stores for use on board a conveyance proceeding to a foreign territory, such duties, not exceeding seven-eighths thereof, shall be repaid as drawback, Conclusion: Managing tax treaties with foreign governments and participating in inter-ministerial deliberations on economic issues having a bearing on fiscal policies and tax administration are also NBR's responsibilities. The main responsibility of NBR is to mobilize domestic resources through collection of import duties and taxes, VAT and income tax for the government. Side by side with collection of taxes, facilitation of international trade through quick clearance of import and export cargoes has also emerged as a key role of NBR. Other responsibilities include administration of matters related to taxes, duties and other revenue related fees/charges and prevention of smuggling. Under the overall control of IRD, NBR administers the excise, VAT, customs and income-tax services. Reference: Customs Act, 1969