NBR says ‘tax exemption’ on handset import, production to lower prices

Since the high-end phones are brought mostly through the grey market, the NBR don’t get revenues, says revenue board chief

The National Board of Revenue (NBR) is prepared to offer “tax exemptions” on both the import and local production of mobile phones in a bid to reduce prices and bring high-end devices into formal channels, revenue authorities’ chief Abdur Rahman Khan has said.

On Monday, Khan said Bangladesh imposes unusually high taxes on trade, largely to protect domestic industry rather than to maximise revenue.

“No country imposes such taxes on trade -- the amount we do. This is not done to collect taxes. Rather, in most cases, it is done for the local industry (to ensure their protection),” he said.

Khan said local manufacturers had raised concerns about potential tax cuts on imported handsets, particularly with the National Equipment Identity Register (NEIR) set to come into operation.

“For example, the manufacturers came to us in the morning saying ‘You will reduce the tax on mobile imports, then what will happen to our investment? Because, you must know that NEIR will start running from tomorrow’, and that’s why we and the government are pondering on how to make it adjust,” he said.

The NBR chairman said the government was seeking a balance between protecting local producers and safeguarding consumer interests, with lower handset prices a key objective.

“What we understand from NBR is that -- to protect the interests of both groups and protect consumer interests, we want the prices of mobile phones and smartphones to drop in Bangladesh. We are ready to offer exemption in both places,” he said.

The NEIR will be enforced from Victory Day, restricting network access for illegally imported phones. However, handsets brought in through tax evasion will be allowed to operate until Mar 15, after which they will be barred from connecting to mobile networks.

Due to high taxes, only a small number of phones are imported legally, while premium devices are largely sold through unofficial channels.

“Since the high-end phones are brought mostly through the grey market, we don’t get revenues,” he said.

“If we can formalise it -- through the NEIR implementation and even if we let the revenue go, there’ll be an increase in revenue collection as the phones will be imported through formal channels.”

Khan said high duties are commonly used to protect domestic industries but signalled flexibility. “We often charge high rates to protect local industries. Even then, we will reduce it (import duties).”

Currently, the combined import duty and value-added tax on smartphones stands at 61.8 percent, while locally produced handsets face taxes of 30 to 35 percent, depending on components and manufacturing variations.

Mobile phone traders recently staged protests against the NEIR, prompting the Ministry of Post and Telecommunication to allow a three-month grace period for phones imported illegally.