VAT on locally-made mobile phones, fridges on cards
The government has decided to levy VAT on those industries to make them more competitive in the market. The National Board of Revenue (NBR) has proposed imposing a 5% VAT on locally-manufactured mobile phones and refrigerators from next fiscal year, according to sources at the finance ministry.
At the same time, the government recommended cutting VAT to 5% from the existing 10% for jewellery traders and 5% from 3% for the restaurant sector. In the next budget, there will be a number of proposals to make the VAT law business-friendly. In some cases, VAT rates will be reduced to give relief to the people, considering local and global economic conditions, said sources in the know about the development. “Prices of raw materials meant for electronic items have risen about 20%, we have to adjust the hike with product prices,” he also said, adding that a number of brands have already done that. Mesbah Uddin Ahmed said the VAT imposition will also hinder the growth of Digital Bangladesh. Rabiul islam Milton, Walton Hi-Tech Industries PLC deputy executive director, said, “We all manufactures are struggling because of raw material price hike. The economy has been facing a slowdown as the local currency has lost its value.”
Industry people say local refrigerators manufacturers have been enjoying VAT exemption since 2010. Thanks to the government policy support a dozen of industries have developed locally, those occupied around 80% of the market and the remaining 20% belong to foreign brands, according to Marketing Watch Bangladesh. Before 2010, foreign brands had around 80% share of the refrigerator market with the remaining 20% market being the contribution of aspiring local brands. Currently, there is 57% tax on smartphone imports and 32% on basic and feature phones. The tax for locally-assembled and manufactured handsets is 18% and 13% respectively. Rezwanul Haque, chief executive officer at Transsion Bangladesh Limited, said mobile manufacturers have paid 5% VAT on raw materials at the import stage if the government imposes any VAT on retail sales that might bring a pressure on the industry.
Trade with Nordic countries on the rise
Bangladesh’s trade with Nordic countries has bounced back after the Covid-19 pandemic and is now growing gradually, said Industries Minister Nurul Majid Mahmud Humayun. He made this comment at a seminar on promoting business on Tuesday. The embassies of Denmark, Norway and Sweden, in collaboration with the Nordic Chamber of Commerce and Industry in Bangladesh, organised the seminar to promote Nordic businesses and investments in Bangladesh. Humayun said the amount of foreign direct investment (FDI) from Nordic countries was not very large as of now but in the years before the pandemic the FDI flow from northern European nations was rising. “This is one area where Bangladesh wishes to see more progress,” he added. In fiscal year 2019-20, the Bangladesh-Nordic trade volume stood close to $1.67 billion, which is greatly and very helpfully in Bangladesh’s favour with Bangladeshi exports amounting to $1.35 billion while imports $0.2 billion.
The industries minister mentioned that more than 5 per cent of Bangladesh’s total exports go only to the Nordic region. From the standpoint of Bangladeshi exports, this is quite impressive given the fact that Nordic countries are not very populous and a lot of the shipments are comprised of consumer goods.
“Some Nordic investments in Bangladesh, especially in the areas of telecommunications and ICT, manufacturing and logistics, agriculture and food production as well as power and energy, truly stand out,” he said. Currently, more than 100 Nordic companies do business in Bangladesh, which is a signal of a dynamic partnership in transition. Some of the Nordic investments and imports have even gone beyond business purposes and helped empower millions of people. Winnie Estrup Petersen, ambassador of Denmark to Bangladesh, Espen Rikter-Svendsen, ambassador of Norway to Bangladesh, and Alex Berg von Linde, ambassador of Sweden to Bangladesh, stressed the importance and need for sustainability. They also discussed the areas where Nordic companies are well placed to supply many advanced skills, goods, services and technical solutions that Bangladesh will need to continue on its path of sustainable development and economic growth. The strong relation between Nordic countries and Bangladesh was reaffirmed as well while the speakers opined that there remained a scope to strengthen economic ties further through increased trade and investment.