Scrap addl tax on smartphone, save customers from price shock: BMBA

Staff Correspondent | Updated at 10:33pm on June 19, 2019

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Bangladesh Mobile Phone Business Association president Mohammad Nizam Uddin Jhontu speaks at a post-budget press briefing organised by the BMBA at the Press Club in Dhaka on Wednesday. Xiaomi local partner Solar Electro Bangladesh director Syedis Sakalayen was present, among others. — New Age photo

Bangladesh Mobile Phone Business Association on Wednesday claimed that prices of smartphone would increase significantly due to the increase in taxes on import of the device by 90 per cent in the proposed fiscal year 2019-20.
The association also demanded continuation of the existing taxation rate on smartphone import and allow the foreign brands like Huawei, Xiaomi, Oppo and Vivo another two‑year duration to setup manufacturing units in the country.
They also mentioned that the government in the proposed budget for the fiscal year slapped additional 15 per cent import duty, 3 per cent regulatory duty and 5 per cent advance trade value added taxes, and withdrawn 2 per cent surcharge on the import of smartphone.
As a result, total taxes on import of smartphone to increase at 57.31 per cent from existing 30.75 per cent, said BMBA president Mohammad Nizam Uddin Jhontu at a post-budget press briefing held at the National Press Club in the city.
He also mentioned that the current tax rates on smartphone in Bangladesh were far higher than the neighbouring countries.
Tax in Bangladesh is 18 per cent high considering the 32 per cent taxes applicable on the import of smartphone in India.
Compared with Bangladesh, the rate is 35 per cent lower in Cambodia, 33 per cent lower in Myanmar, 40.75 per cent lower in Sri Lanka, 43 per cent lower in Thailand, 40 per cent lower in Vietnam, 45 per cent lower in Malaysia, 43 per cent lower in Singapore and 38 per cent lower in the Philippines.
Mentioning about the grey market of smartphone in the country and existing volume of 3 crore illegal mobile handsets, the BMBA president said that the government had lost around Tk 9,000 crore due to the grey market sales.
If the increased tax rate on smartphone import remains, the supply of smartphone through grey market would increase significantly and that could result in Tk 12,000 crore laundering from the country, Nizam said.
In addition, the sales of legally imported smartphone might see decline sharply and that would result in another Tk 2,000 crore revenue loss for the government, he said.
Speaking about the need of smartphone penetration for the country’s digitisation, the government goal would be hampered with the imposition of new tax on smartphone as 95 per cent of the country’s internet usages are through smartphone.
Solar Electro Bangladesh, local partner of the Chinese handset brand Xiaomi, director Syedis Sakalayen said that the local manufacturers were supplying around 25 per cent of the country’s handset demand while rest of the demand were fulfilled by the importers.
Although the government imposed the duty with a view to encouraging local manufacturing, the importers and the international brands should be allowed another two years so that they could prepare themselves for starting manufacturing in the country, Syedis said.
Otherwise, the foreign brands would close down their business in Bangladesh which would result in huge unemployment as around 50 lakh people are directly and indirectly affiliated with the sector, he said.