Friday, July 19, 2019 | ePaper

Addl tax on smartphone to boost illegal import

Big revenue loss feared

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Staff Reporter :
Leaders of Bangladesh Mobile Phone Business Association (BMBA) on Wednesday demanded to the government to keep the existing import tax on foreign-made smartphones and to withdraw the additional tax proposed in the budget for the fiscal year 2019-2020.
They gave the call at a post budget press conference held in the National Press Club.
"The proposed tax structure will encourage illegal import of foreign-made smartphones and low quality devices, resulting in a big revenue loss for the government," said BMBA President Mohammad Nizam Uddin Jitu.
He said the estimated revenue loss could reach Tk 4,000 crore.
The BMBA leader also cited that import of smartphone through legal channel is also expected to fall drastically due to imposition of a higher import duty, which could lead to an estimated revenue loss of Tk 2,000 crore in the next fiscal year. 
In the proposed budget for the fiscal year 2019-2020, Finance Minister AHM Mustafa Kamal on Thursday proposed to increase the supplementary duty on smartphone to 25 per cent from existing 10 per cent.
'As smart phone is used by affluent people, I propose to increase customs duty on smart phone to 25 per cent,' he said.
However, customs duty on feature phone would remain unchanged as relatively poor people used it, the Finance Minister said.
In his budget speech, Finance Minister also said that due to the government's initiative some five to six local manufacturers have already started manufacturing and assembling cell phones in Bangladesh and currently they serve about 30 per cent local demand.
Mohammad Nizam Uddin Jitu said that the government proposed to hike the supplementary duty on imported smartphones in the budget for fiscal 2019-20. Even, it also raised some other taxes.
According to him, importers are currently paying about 30.75 percent in taxes, and if this budget passed, they will have to pay a total 57.31 percent tax on smartphone import.
"A higher import duty will push up smartphone prices significantly in the local market and consequently, the device will go out of the reach of common people," said Jitu.
He said that we welcoming the government move to help flourish local industry. But, the government policy will only benefit a few companies, which are not capable to meet the local demands.
BMBA leaders mentioned that currently there are more than nine crore active internet connections in the country and 95 per cent of total internet users are browsing internet on mobile phone handsets. "If smartphone goes out of the reach as result of tax hike, it will hinder government's digital Bangladesh vision," he added.
They also urged the government to continue the existing tax structure for next fiscal as the establishment of assembling industry is time consuming with developing skill manpower.
More than 50 lakh mobile phone sets are imported to the country every year. Of them, 20-25 per cent are smartphones.

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