Govt to lift minimum value for 50 imported goods

The government has identified around 50 imported products to be listed out of minimum value limits and will move to phase out the bar to leave their prices to be determined by the market. 

With this move, expected in the new budget, duty will be imposed on the real import prices. The list includes a number of consumer goods, including bags and shoes. 

According to sources at the finance ministry, during the presentation of the budget today, the finance minister is likely to propose removal of the minimum value or tariff value of these products through the finance bill.

At present, the minimum value is applicable on about 325 imported items. Sources say that the goal is to gradually remove the minimum value from all products. According to the policy of the World Trade Organization (WTO), no country can fix duty on imported goods in this way and the move comes as part of compliance with WTO policies and to make trade seamless.

In addition, the local car manufacturing industry will get VAT exemption at the production stage till 2026. However, as part of its emphasis on producing car bodies and  doing the painting phase locally, 5% VAT will be levied on those two components if any manufacturer fails to do those locally after the said time.

To facilitate investment in the poultry and dairy sectors, tariffs on machinery imports may be reduced, and raw materials import will be made easier. The existing 5% VAT on paper and fabric sales at the wholesale level can be reduced to 2%. Sources also said that despite the traders' demand for reduction or withdrawal of advance tax at the import stage, there has been no change in it. In addition, supplementary duties are added to several products.

Traders see the initiative to withdraw the minimum value of imported goods as positive.

Manzur Ahmed, advisor to the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and an international trade expert, told The Business Standard that tariffs should be based on the price at which they are sold in the international market. The existing minimum value is higher in some cases and abnormally lower in others that does not reflect the actual price.

"It should be removed and valued under the statutory regulatory order (SRO) 57 of the NBR, an order made in accordance with WTO policy. It says that the lowest price of any product in the last three months of import price should be taken into consideration. But products are not being tariffed according to the SRO.

At present, tariffs are levied on any of the three and a quarter hundred commodities, regardless of the international market price per kg, or ton, or unit. However, even if it is a minimum price, the customs officers can charge a higher price considering the international market price. But even if the import of that product is below the minimum value, it cannot be taxed at that price.

In the last two months, during the budget discussion, importers said the prices of commodities in the world market may increase or decrease. But when the price goes down, the customs officials do not take it into consideration. They demanded that the goods be tariffed on the basis of market price.

However, there is a suspicion among the customs officials that if the minimum value goes up, the tendency to evade customs duty through misdeclaration will increase.

A senior official at the NBR's customs department, speaking on condition of anonymity, told The Business Standard that there are advantages as well as disadvantages to lift the minimum value. The same product can be valued by each customs house at a different price. It can also be malicious. In that case there is a possibility of revenue evasion.

However, sources said at present, almost all the minimum value of imported goods is less than the market price.

Another NBR customs official said the chances of evasion would be reduced. Because NBR's special software Asycuda world system has the opportunity to know the international market price of the product concerned.