In Bangladesh, duties and taxes on imports can significantly impact the cost of shipping. Here’s an overview of how duties and taxes affect shipping costs in Bangladesh:
1. Duties in Bangladesh
Customs Duties:
- Import duties in Bangladesh can range from 0% to 25% depending on the product category.
- Basic Customs Duty (BCD): This is the standard import duty imposed on most goods. The rate varies according to the product’s HS code (Harmonized System code).
- For raw materials and essential goods, duties are usually lower, often around 10% or 15%.
- Luxury goods, automobiles, and electronics can have higher duties, up to 25% or more.
Additional Taxes:
- In addition to the basic customs duty, several additional taxes may apply to imports:
- Value Added Tax (VAT): A 15% VAT is levied on most imported goods.
- Supplementary Duty (SD): This is an additional tax that may be imposed on specific goods like luxury items, tobacco, and alcohol. The rates range from 0% to 100%, depending on the item.
- Advance Income Tax (AIT): Some imports are subject to a 5% AIT, which is usually withheld at the time of customs clearance.
Impact on Shipping Costs:
- The customs duties, VAT, and supplementary duties together can add a substantial cost to the total shipping price.
- For goods with high duties (such as electronics and luxury items), the overall import costs, including shipping and customs clearance, can be significantly increased.
2. Taxes on Imports in Bangladesh
Value Added Tax (VAT):
- 15% VAT is applied on most imported goods in Bangladesh. This tax is calculated on the customs value of the goods, including customs duties.
- For example, if the customs value of goods is $1,000 and the customs duty is 10%, then the VAT will be applied on the total amount (customs value + duty), so VAT = 15% of $1,100 = $165.
Supplementary Duty (SD):
- This is an additional tax that applies to certain products, such as luxury items and non-essential goods.
- For instance, luxury cars may face up to 100% SD, which dramatically increases the cost of these products in the country.
- Tobacco and alcohol also face significant supplementary duties, ranging from 20% to 100% or more.
Advance Income Tax (AIT):
- AIT applies to some imports at a rate of 5%, but this tax is usually not refundable. The AIT is paid by the importer and added to the cost of goods.
3. Impact of Free Trade Agreements (FTAs)
Bangladesh is not part of many major Free Trade Agreements (FTAs) compared to some other countries. However, it has several preferential trade arrangements that can affect duty rates and tax exemptions on certain goods:
- SAFTA (South Asian Free Trade Area): Bangladesh is part of SAFTA, which aims to reduce tariffs between South Asian countries (India, Pakistan, Sri Lanka, etc.). This can lead to lower duties on intra-regional trade.
- EU and Bangladesh: Bangladesh benefits from the EU’s Everything But Arms (EBA) initiative, which allows duty-free access for most products, except arms and ammunition, to the EU market. However, this applies to exports from Bangladesh to the EU, not imports into Bangladesh.
- China and Bangladesh: Under the China-Bangladesh Free Trade Agreement (FTA), some products can receive reduced tariffs when imported from China.
Despite these agreements, Bangladesh’s duties for imports from most other countries remain relatively high, especially for non-essential goods or those that face luxury taxes.
4. Customs Procedures and Clearance
Bangladesh has stringent customs procedures that can affect the time and costs of shipping goods. Key points include:
- Customs Clearance Fees: There are various clearance fees based on the goods being imported. These include:
- Customs processing fees.
- Port handling fees.
- Examination fees (if goods are physically inspected).
- Customs Declaration: Importers must submit a customs declaration with all necessary documentation (invoice, bill of lading, packing list, etc.) for processing. Any discrepancy in documentation could lead to delays and additional costs.
- Electronic Data Interchange (EDI): Bangladesh has implemented EDI systems for faster processing of customs data, which can streamline the import process. However, the overall time for clearance can still vary depending on the complexity of the goods.
5. General Import Duties and Taxes for Key Product Categories
| Product Category | Customs Duty | VAT | Supplementary Duty (SD) | AIT |
| Raw materials | 0% – 10% | 15% | 0% – 5% | N/A |
| Electronics | 10% – 25% | 15% | 0% – 10% | 5% |
| Luxury goods (e.g., cars) | 25% | 15% | Up to 100% | 5% |
| Tobacco and alcohol | 40% – 50% | 15% | Up to 100% | 5% |
| Clothing and textiles | 0% – 10% | 15% | 0% – 10% | N/A |
| Food products | 5% – 15% | 15% | 0% – 10% | N/A |
6. Key Takeaways for Shipping Costs to Bangladesh
- Import duties in Bangladesh can significantly increase the cost of shipping, especially for luxury goods, electronics, and automobiles, where duties can be quite high.
- VAT and Supplementary Duty also add to the cost of importing goods, making shipping even more expensive.
- FTAs like SAFTA and China-Bangladesh agreements can help reduce duties on certain goods.
- Advanced taxes, like AIT, may further increase the overall shipping cost.
- Customs clearance fees and the time required for clearance are additional factors to consider when calculating the total shipping cost.
