Essential imports to face 2pc tax as NBR ends exemptions

Staff Reporter :

The National Board of Revenue (NBR) is preparing to impose a 2 per cent Advance Income Tax (AIT) at the import stage on nearly 200 previously exempted items-a move that could disrupt supply chains, raise consumer prices, and place additional pressure on key industries.

Part of a broader effort to phase out tax exemptions and enhance revenue
collection, the proposed measure is expected to generate approximately Tk 2,000 crore in additional revenue. However, the announcement has triggered serious concerns among business leaders and consumer rights advocates.

Items under consideration include essential food staples such as potatoes, onions, lentils, chickpeas, soybeans, and maize, alongside fertilisers, crude oil, sugar, and medical supplies.

The proposed list also encompasses raw materials crucial to the country’s export-driven ready-made garments (RMG) sector, including cotton and synthetic fibres. Electronics and industrial equipment-such as routers, printers, aircraft engines, and buses-are likely to be affected as well.

NBR officials argue that the move will promote tax compliance and widen the tax net. “Currently, there is no AIT on about 200 tariff lines. We plan to include almost all of them, barring one or two,” said a senior NBR official, speaking on condition of anonymity. A final list is expected to be confirmed following a high-level meeting later this week.

However, experts caution that such taxes in Bangladesh are rarely absorbed by importers and are typically passed on to consumers.

Dr Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), warned that imposing AIT on critical items-particularly food and industrial raw materials-would have a cascading effect on household budgets and industrial production.

“Key inputs should remain exempt to protect both consumers and industries,” he said.

Consumer rights advocates echoed the concerns. “People are already under immense economic strain-imposing taxes on basic goods will only increase their hardship,” said SM Nazer Hossain, Vice-President of the Consumers Association of Bangladesh.

Businesses are similarly alarmed, citing the infrequent and delayed nature of AIT refunds. Saleudh Zaman Khan Jitu, Managing Director of NZ Group, estimated that the proposed tax would cost his company an additional Tk 6 crore on raw material imports worth Tk 300 crore. “The burden ultimately falls on manufacturers and consumers,” he added.

Industry leaders in the textile sector, one of Bangladesh’s most significant economic contributors, urged the government to prioritise long-term support over short-term revenue generation. Showkat Aziz Russell, a director of the Bangladesh Textile Mills Association (BTMA), stated, “Instead of imposing financial burdens, the government should focus on growth-oriented policies that support local manufacturing, create employment, and ensure sustainable revenue.”

While the policy shift aims to streamline the country’s tax structure, stakeholders stress the importance of striking a balance between fiscal consolidation and economic resilience.