Taxation proposals made in the budget for 2023-24

Tax

Mostafa Kamal Majumder

Finance Minister AHM Kamal on Thursday proposed a 7 lakh 61 thousand 785 crore budget with a deficit of Tk 2 lakh 61 thousand 785 crore.

Total revenue is estimated at Tk 5 lakh crore . Out of this Tk 4 lakh 30 thousand crore through the National Board of Revenue and Tk 70 thousand crore from other sources.

Out of the total deficit, Tk 1 lakh 55 thousand 395 crore is proposed to be financed from domestic sources and Tk 1 lakh 2 thousand 490 crore from external sources, the minister said in his budget speech.

Out of the totqal outlay made in the budget the minister proposes to allocate a total of Tk 4 lakh 36 thousand 247 crore to operating and other sectors and Tk 2 lakh 63 thousand crore to the Annual Development Programme.

For the revenue collection target of Taka 5 lakh crore the Finance Minister made a series of taxation proposals. We reproduce below Chapter 9 of the budget speech which contains these proposals.

Chapter 9 

Proposal on Income Tax, Value Added Tax and Import-Export Duty 

Direct Tax: Income Tax 

Madam Speaker 

230. Direct tax or income tax is an effective system to promote equality and social justice through income redistribution, which results in favorable economic growth and development for all citizens of the country. Income tax is a progressive tax system where tax collected from the wealthy taxpayers can be spent to meet the needs of the poor and low-income people. Through this system, it is possible to address discrimination in income and wealth alongside meeting revenue expectations of the state. At present, the share of income tax to the total tax revenue collected by the National Board of Revenue (NBR) stands at around 35 percent. Despite the outbreak of COVID19 pandemic, income tax recorded an average growth rate of 16 percent or above in recent years, and this growth is continuously maintaining an upward trend. 

Due to post COVID 19 recovery of world economy, product prices are increasing in the international market since 2021. Apart from this, product price level is beginning to destabilize in the world economy because of Russia Ukraine crisis. It is a challenge for us to cope up with the increase in price of crude oil, natural gas and essential products in the international markets. There is no 150 alternative to internal revenue to overcome this challenge. In the proposed budget, policy initiatives have been undertaken with a view to creating employment through attracting large public/ private investments, facilitating creation of new industry and commerce as well as strengthening sustainable revenue management and collection activities. 

Madam Speaker 

231. Bangladesh has become a role model in the world under the charismatic, visionary and astute leadership of Honorable Prime Minister. At present, Bangladesh is the 35th largest economy of the world whereas once upon a time the country was one of the 10 poorest countries. In support of making a smart Bangladesh, as per instruction of Honorable Prime Minister, a taxpayer, business and investment friendly policy has been adopted to collect taxes to establish a strong tax culture in the country. The main objective of this policy is to increase contribution of direct taxes in total revenue to 42% and 50% by 2031 and 2041 respectively. As part of the strategy for collecting targeted revenue from internal sources, digital transformation, tax net expansion and administrative capacity building activities are ongoing. 

Madam Speaker 

232. At this point I am presenting some important proposals relating to income tax for the FY 2023-2024 before this august House through you. 

Madam Speaker 

233. The tax-free income threshold, tax rates and tax slabs for individual tax payers, other than companies and local authorities, have remained unchanged since FY 2020-2021. The unchanged tax-free income threshold on the one hand, the loss of real income due to inflation on the other, and considering the matter of comfort of the genuine and valued taxpayers with regard to payment of taxes, I propose to increase the tax-free income threshold applicable for the individual taxpayers, other than companies and local authorities. This reduction of tax burden will hopefully give them some relief and encourage them to pay taxes regularly. I, therefore, propose to increase the tax-free income threshold of male taxpayers from Tk. 3 lakhs to Tk. 3 lakhs 50 thousand and tax-free threshold of female taxpayers and taxpayers above 65 years of age from Tk. 3 lakhs 50 thousand to Tk. 4 lakhs respectively. At the same time, I propose the minimum tax rate for individuals at 5 percent and the maximum tax rate for them at 25 percent. The following table presents the proposed tax-free income threshold, tax rates and tax slabs for all categories of individual taxpayers except companies and local authorities: Individual Taxpayer- Tax-free Income Threshold Tax exempted income Current 2022-23 Proposed 2023-2024 General tax payer Tk. 3 lakhs Tk. 3 lakhs and 50 thousand 

Tax exempted income Current 2022-23 Proposed 2023-2024 Women and Senior citizen above 65 years age Tk. 3 lakhs and 50 thousand Tk. 4 lakhs Physically Challenged persons Tk. 4 lakhs and 50 thousand Tk. 4 lakhs and 75 thousand War-wounded gazette freedom fighter Tk. 4 lakhs and 75 thousand Tk. 5 lakhs Third gender tax payers Tk. 3 lakhs and 50 thousand Tk. 4 lakhs and 75 thousand The income tax-free threshold would be increased for parents or legal guardians of physically challenged child or dependent by Tk. 50 thousand for each child/ dependent. Individual taxpayer- Tax rate Current Tax slabs 2022-23 Current Tax rate 2022-23 Proposed tax slab 2023-24 Proposed Tax rate 2023-24 Up to Tk. 3,00,000/- Nill Up to Tk. 3,50,000/- Nill Next Tk. 1,00,000/- 5% Next Tk. 1,00,000/- 5% Next Tk. 3,00,000/- 10% Next Tk. 3,00,000/- 10% Next Tk. 4,00,000/- 15% Next Tk. 4,00,000/- 15% Next Tk. 5,00,000/- 20% Next Tk. 5,00,000/- 20% On balance 25% On balance 25% 

Madam Speaker 

234.  Existing minimum tax for a taxpayer, except company taxpayer, residing in Dhaka North City Corporation, Dhaka South city corporation and Chittagong City Corporation is Tk. 5,000, any other city corporation is Tk. 4,000 and other area is Tk. 3,000. I propose to maintain this structure of minimum tax unchanged for the next year as well. 

Madam Speaker 

235.  One of the responsibilities of a citizen in a country is to ensure their participation in government’s welfare work by paying minimum tax in return of the privileges provided by the state to them. I propose to make the minimum tax two thousand taka among competent people who are below taxable income but has obligation to submit income tax return to take service from government with a view to circulating this participation in government welfare work. 

Madam Speaker 

236. Surcharge is collected from wealthy individual taxpayers in Bangladesh at certain rates based on their income tax. This provision of surcharge has been in force for the last few years. Surcharge of individual taxpayers ensures balanced distribution of income and wealth along with economic development of society. In case of levy surcharge, on the basis of individual taxpayers disclosed net wealth value to simplify enforcement of surcharge levy and reduce the burden of the middle-class taxpayers, I propose to raise the limit of surcharge from Tk. 3 crore to Tk. 4 crore. I propose a minimum surcharge amounting to 10 percent, where net wealth of an individual exceeds Tk. 4 crore and 35 percent surcharge for individuals who have net wealth exceeding Tk.100 crore. 

Madam Speaker 

237. At present, there are several corporate tax rates currently in effect in Bangladesh. Based on the compliance with terms of transaction that all income, expenditure and investment of taxpayers must be transacted through formal channel, the current tax rate of non-listed companies, artificial personality created by law not otherwise defined and other taxable entities varying from 30 percent to 27.5 percent. Also, to facilitate formalization of the economy and to incentivize formation of One Person Company (OPC), the current tax rate for non-listed companies for OPCs varying from 25 percent to 22.5 percent. 

The current tax rate is 20 percent for listed companies that issue shares worth more than 10 percent of its paid up capital through initial public offering (IPO) and 22.5 percent which companies issue shares worth 10 percent or less of it is paid up capital through initial public offering(IPO). But in this case, the tax rate would be 22.5 percent instead of 20 percent and 25 percent instead of 22.5 percent for applicable listed companies if the companies fail to comply with the conditions that all expense, investment and receipts or income except fixed annual cash expenditure and investment must be made through bank transfer. From FY2020-2021 to FY2022-23 the corporate tax rate has been reduced every year. Considering all these, as a part of efforts to achieve tax GDP growth targets I am proposing to retain the existing structure of corporate tax rate. 

I propose the following corporate tax rate for FY2023-2024 applicable for taxpayers other than individuals Tax rate for company and others: Description Existing 2022-23 Proposed Tax rate 2023-2024 Tax rate On failure to comply with conditions Publicly traded company that transfer shares worth more than 10 percent of its paid-up capital through Initial Public Offering (IPO) 20% 22.5% Unchanged Publicly traded company that transfer shares worth ten percent or less than ten percent of its paid-up capital through IPO 22.5% 25% Unchanged Non-publicly traded company 27.5% 30% Unchanged One Person Company (OPC) 22.5% 25% Unchanged Publicly traded bank, insurance and financial institution (except merchant bank) 37.5% 

Condition not applicable Unchanged  Description Existing 2022-23 Proposed Tax rate 2023-2024 Tax rate On failure to comply with conditions Non-publicly traded bank, insurance and financial institution 40% Condition not applicable Unchanged Merchant bank 37.5% Condition not applicable Unchanged Company producing all sorts of tobacco items including cigarette, bidi, chewing tobacco and gul 45% + 2.5% (surcha rge) 

Condition not applicable Unchanged Publicly traded mobile operator company 40% Condition not applicable Unchanged Non-publicly traded mobile operator company 45% Condition not applicable Unchanged Association of persons, trust and fund 27.5% 30% Unchanged Artificial juridical person and other taxable entity 27.5% 30% Unchanged Private university, private medical college, private dental college, private engineering college or private college solely dedicated to imparting education on ICT 15% Condition not applicable Unchanged *Condition: All receipts and income must be transacted through bank transfer and every single transaction above Tk. 5 lakhs and annual investment over Tk. 36 lakhs of expense and investment must be made through bank transfer.

Description Existing 2022-23 Proposed Tax rate 2023-2024 Tax rate On failure to comply with conditions Non-publicly traded bank, insurance and financial institution 40% Condition not applicable Unchanged Merchant bank 37.5% Condition not applicable Unchanged Company producing all sorts of tobacco items including cigarette, bidi, chewing tobacco and gul 45% + 2.5% (surcha rge) Condition not applicable Unchanged Publicly traded mobile operator company 40% Condition not applicable Unchanged Non-publicly traded mobile operator company 45% Condition not applicable Unchanged Association of persons, trust and fund 27.5% 30% Unchanged Artificial juridical person and other taxable entity 27.5% 30% Unchanged Private university, private medical college, private dental college, private engineering college or private college solely dedicated to imparting education on ICT 15% Condition not applicable Unchanged *Condition: All receipts and income must be transacted through bank transfer and every single transaction above Tk. 5 lakhs and annual investment over Tk. 36 lakhs of expense and investment must be made through bank transfer. 

Madam Speaker 

238. Compared to other developing and developed countries, the tax-GDP ratio of Bangladesh is not that encouraging. It is essential to raise our tax-GDP ratio significantly in order to support our graduation to a developed country. We need to expand the tax net by bringing all eligible citizens of the country within the tax net, which in turn will enhance our capacity to tap more revenue and expand the size of the formal economy. Around 88 lakhs persons currently hold ETIN in Bangladesh. Taking some practical initiatives in last year's budget proposal, the number of submitted income tax return has increased by 25 percent in the current financial year in comparison to that of the previous year. The number of returns is around 32 lakhs though the number is not as per expectation. Following various models of the developed countries, I propose to formulate the rules for Tax Return Preparer (TRP) with a view to expanding the tax net through new individual taxpayers. We hope that in e-return platform, through Tax Return Preparer (TRP) we will be able to make submission of a lot of new income tax return along with raising number of taxpayers holding TIN in this year. 

Madam Speaker 

239. The present government is following the principle of gradual expansion of tax base along with constant rationalization of tax rate. In compliance with this policy, new areas of revenue collection are prepared and for the purpose of bringing equal competition in business we are proposing the followings in the 158 budget: a) To increase the tax rate at source rationally during land registration in areas under and outside the jurisdiction of Rajuk and CDA; b) To rationalize tax rate at source with a view to reduce tax refunds on imports of manganese which is a raw material for steel production; c) To rationalize tax rate at source on supply of locally produced 33 to 500 KV cables. 

Madam Speaker 

240. Due to the unstable war situation in the world, there are signs of recession in the global economy. In this case, we have to face a difficult situation in the next financial year. We have to deal with the situation through formulating financial rules and implementation of it with great prudence and foresight. I propose multi-modal increase in travel tax rates to reduce unnecessary foreign travel among the public, inculcate austerity habits and create new revenue streams in economy. This policy will give us more revenue on the one hand and save dollars on the other hand by reducing unnecessary foreign travel. 

Madam Speaker 

241. At present, Bangladesh has played a leading role in the developed world under the firm leadership of the honorable Prime Minister. The government has adopted a policy of progressively following the best practices of the Income Tax Act with the 159 developed world. In continuation of this, the idea of imposing taxes on sectors that are harmful to public health is prevalent in the developed world and as an initiative to reduce environmental pollution in the country, I propose to impose various cc or kilowatt-based environmental surcharges on multiple vehicles. 

Madam Speaker 

242. "Direct Tax Expenditure" means rebates, discounts, exemptions, reduced rates of taxation and exclusion of income from computing total taxable income. It is a type of tax subsidy. That means, if this subsidy was collected as tax, it would be added to the total tax collected and the amount of tax would increase. The “Direct Tax Expenditure” will also be included in the total subsidy along with other subsidies of the government. However, “Direct Tax Expenditure” creates overall employment along with economic stimulation, social balance and industrial support. In line with international best practices, the Income Tax Department of the National Board of Revenue has for the first time in Bangladesh estimated “Direct Tax Expenditure” based on the analysis of field level factual data, which has been achieved entirely through the efforts of the Income Tax Department. 

243. The total estimated amount of the said “Direct Tax Expenditure” applicable for the financial year 2020-2021 is Tk 1,25,813 crore, of which Tk 85,314 crore is at the corporate level and Tk 40,499 crore at the individual level. Overall, this “Direct Tax Expenditure” is 3.56% of total GDP for the fiscal year 2020- 2021. Taking into account the projected total GDP size of 2023- 160 2024, the total amount of projected “Direct Tax Expenditure” for the current financial year will be Tk 1,78,241 crore. Adding the estimated subsidy amount to this brings the total subsidy amount to Tk 2,89,228 crore. Micro Finance, 15315, 12% Remittance, 11287, 9% Power and Energy, 8380, 7% Economic zones & Hi Tech indusry, 4612, 4% Garments & Textile, 3438, 3% Poultry & Fisheries, 3120, 2% IT/Software, 1477, 1% Share capital gain, 966, 1% Others including salaries, 77218, 61% Direct Tax Expenditure (Crores Tk) 161 

Madam Speaker 

244. The imposition, collection and management of income tax in the Indian subcontinent including Bangladesh was carried out through the Income-tax Act, 1922. The Income-tax Ordinance, 1984 was enacted in 1984 by amending the Income-tax Act, 1922, which is still in force. Instead of 'Income-tax Ordinance, 1984' made in English language, the Income-tax Act, 2023 has been made in Bengali language by making it more contemporary and modern. The contents of the provisions made in English of the existing laws have been converted into simple Bengali language. In addition to reducing the discretionary power of officials as much as possible, the proposed law has included accounting methods, depreciation and amortization rules, provisions related to capital gains, income from intangible assets, transfer pricing, alternative dispute resolution provisions, etc. In order to facilitate business and investment, instead of filing 29 returns and statements related to tax deduction at source in the existing law, only 12 returns are proposed in the proposed law. To simplify tax compliance, tax return filing under self-assessment, return process and return audit provisions, international standardization has been ensured, and Earnings stripping rule is included. 

Value added Tax 

Madam Speaker 

245. In order to continue the progress of economic development, 162 there is no alternative to increasing revenue collection and raising the tax-GDP ratio to the desired level. Bangladesh has the potential to enhance its tax-GDP ratio like other developing and developed countries. VAT can play an important role in raising the tax-GDP ratio to its desired level. Value Added Tax is a modern and scientific indirect tax. The largest share of NBR revenue is derived from local VAT. As you know, due to the negative impact of Ukraine-Russia war after the Covid pandemic on the global economy, the government has taken various measures so that the socio-economic development is not hindered. Achieving the desired goals for socio-economic development and thereby joining the rank of developed country is not possible without a flourishing domestic industry. These issues are seriously considered in this year’s budget preparation. As part of these views, various initiatives have been taken in the Value Added Tax sector. Expansion of VAT-net, achieving the desired revenue growth, providing support to domestic industries, generating job opportunities, attracting foreign investment, encouraging production of import substitute goods, rationalizing incentives provided to the local industries and considering their capacity to face the challenges in post LDC graduation period and simplification of VAT rules and regulations - these are considered at the core of budget formulation. In this regard I am placing following proposals in VAT sector for kind consideration of this august house. 

Madam Speaker 

246. With the aim of removing practical and procedural complexities, facilitating trade and increasing revenue collection, I am presenting the following proposals regarding Value Added Tax and Supplementary Duty Act, 2012 and the Value Added Tax and Supplementary Duty Rules, 2016: a) I propose to amend the definition of “input”, “output tax”, “tax fraction”, “representative”, “export” in the act, and “turnover tax certificate”, “bank account” and “tax registration certificate” in the rules. b) I propose for necessary amendments in the relevant provisions to further clarify the condition of availing input tax credit against services imported by registered persons. In addition, like mobile banking institutions, I propose to bring necessary amendments in the relevant provisions to consider invoices for electricity bill, issued by banks, digital payment gateway institutions, as VAT invoices; c) I propose to bring necessary amendments in the relevant section with a view to rationalizing the provisions relating to partial input tax credit; d) Some products (e.g. medicines) are exported abroad in addition to local supply. As supplementary duty is not levied at local supply against the same goods, it is not possible to adjust the supplementary duty paid against the materials which is used in export. Consequently, refund of SD claims arise and the current provision requires waiting at least six tax-months for refund claims thereby increasing the cost of doing business. Therefore, with the aim of facilitating trade, I propose to introduce necessary amendments to get SD refund without delay, including the provision of refund of supplementary duty; e) Separate show-cause notices are to be issued and hearing to be conducted in respect of determination of tax and imposition of penalty as per existing provisions. This creates complexity and is time consuming. Therefore, I propose to bring necessary amendments in the relevant provisions of the Act and Rules so that “determination of tax” and “imposition of penalty” (where applicable) can be done simultaneously. Consequently, if a show-cause notice is issued for determination of tax, it is not necessary to issue a show-cause notice and take a hearing for imposition of penalty. In addition, I propose to introduce other necessary amendments with the aim of making the related provisions simpler and more understandable; f) I propose for necessary amendments in the relevant rules to further clarify the provisions relating to change of place of business; g) At present, there is an obligation to submit Proceed Realization Certificate-PRC at the time of filing refund application against export. But, in many cases it is not possible to submit the application as the PRC is not available within the specified time. In order to solve this complexity, I propose to make necessary amendments in the relevant provisions by canceling the obligation to submit PRC at the time of filing the application and to make other necessary amendments in the relevant provisions; h) I propose necessary amendments in the provisions relating to correction of Tax Return to the extent that Return shall not be amended if any negative adjustment or input tax credit are not done within specified period; i) I propose to bring necessary amendments to remove certain ambiguities in the rules relating to Central Registration; j) The definition of “online sale of goods” means only retail sale, where the market place is also needed to be included in the definition. Therefore, with a view to ease of doing business, I propose to bring the necessary amendments by including the "market place" in the definition of " online sale of goods "; k) I propose for necessary amendments in the notification relating to delegaton of duties and responsibilities of the Commissioner to his subordinate as it is contradictory to the related rules; l) Since there is no activity relating to Stevedoring, I propose to abolish it from the First Schedule of the VAT Act; m) I propose to replace the term “paints” with “paints (including primers)” in the Second Schedule of the Act to eliminate confusion and clarity at field level; n) I propose for necessary amendments in the Value Added Tax and Supplementary Duty Act, 2012, the Value Added Tax and  Supplementary Duty Rules, 2016 and certain notifications to correct clerical errors; and o) I propose necessary amendments in some forms and to add new forms under Value Added Tax Rules to reduce procedural complexity, 

Madam Speaker 

247. To ensure proper supervision of Value Added Tax collection activities and increase revenue collection, I propose the following amendments to relevant section and rules: a) I propose for necessary amendments in the relevant section with a view to rationalizing the existing provisions of adjudication power of the Revenue Officer up to the Commissioner; b) In order to bring conformity with the Law, I propose necessary amendments relating to the provision of adjustments in case of payment not made through either banking medium or mobile banking; c) After the search and seizure process, the deadline for submission of the preliminary report is proposed to be extended by 05 (five) working days instead of 03 (three) working days and thereafter an additional 30 (thirty) days is proposed to extended by the Commissioner or the Director General for submission of the final report. Also, I propose to bring necessary amendments in the relevant provisions to eliminate complexities. 

Madam Speaker 

248. In order to increase revenue collection in the financial year 2023-24, I present the following proposal to this August House: a) I propose to impose 15 percent VAT on ball point pen at the manufacturing stage; b) I propose to impose 5 percent VAT on software production and customization services; c) I propose to withdraw full exemption and imposition of 5 percent VAT at the local manufacturing stage on poly propylene staple fiber and to continue existing exemption on import of basic raw material till June 30, 2024; d) I propose an imposition of 7.5 percent VAT instead of existing 5 percent VAT at local manufacturing stage on iron or steel (LPG Cylinder) and to continue this exemption till June 30, 2024; e) I propose to extend the notification period till June 30, 2024 for mobile phone manufacturer/assembler by imposing 2 percent instead of 0 (zero) percent, 5 percent instead of 3 and 7.5 percent instead of 5 percent respectively at local stage. I also propose to rationalize some of the conditions of the said notification and add new conditions; f) I propose to fix 7.5 percent VAT instead of 5 percent on all types of plastic tableware, kitchenware, household articles, hygiene and toilet articles including any similar products (except tiffin boxes and water bottles); g) I propose to fix 7.5 percent VAT instead of 5 percent on kitchen towel (24-26 gsm), Toilet tissue (18-24 gsm), Napkin tissue (20-24 gsm), Facial tissue/pocket tissue (12-16 gsm), Hand towel/Paper towel/clinical bed; h) I propose to fix 7.5 percent VAT instead of 5 percent on aluminum and kitchen or other household articles, sanitary ware and parts made of aluminum; and i) I propose to fix 7.5 percent VAT instead of 5 percent on sunglasses (plastic and metal framed). 

Madam Speaker 

249. In order to attract domestic and foreign investment, create employment, produce import substitute goods and maintain the ongoing dynamics of domestic Industries development, I present the following proposals: a) Extension of existing VAT exemption facility for production of refrigerator and freezers till June 30, 2024 ; b) Extension of existing VAT exemption facility for production of Washing Machine, Microwave Oven, Electric Oven till June 30, 2025; c) Extension of existing VAT exemption facility for production of Blender, Juicer, Mixer, Grinder, Electric Kettle, Multi Cooker and Pressure Cooker till June 30, 2025; d) Extension of existing VAT exemption facility for production of Computer Printers, Toner Cartridges/Inkjet Cartridges, Computer Printer Parts, Computers, Laptops, AIOs, Desktops, Notebooks, Notepads, Tabs, Servers, Keyboards, Mouse, barcode or QR scanner, interactive display, RAM, PCBA or motherboard, mobile phone charger and battery, power bank, router, network switch, modem, network device or hub, Speakers, Sound System, Earphones or Headphones, SSD or Portable SSD, Hard Disk Drive, Pen Drive, Micro SD Card, Flash Memory Card, CCTV, Monitor (not exceeding 22"), Projector, Printed Circuit Board, e-writing Pad, USB Cable or data cables, digital watches, various types of Loaded PCBs till June 30, 2026; and e) Extension of existing VAT exemption facility for production of Linear Alkyl Benzene Sulphonic Acid (LABSA) and Sodium Lauryl Ether Sulphate (SLES) till June 30, 2024. 

Madam Speaker 

250. To make the business environment friendlier, to support manufacturing of import substitute products and to reduce tax burden at the local manufacturing stage, I present some more proposals: a) I propose exemption VAT in excess of 5 (five) percent at the production stage on “optical fiber cable” till June 30, 2024; 170 b) I propose to raise the existing exemption limit for “Handmade Biscuits” to Tk.200 per kg from Tk.150 and for “Cakes (excluding Party Cake)” to Tk.300 per kg from Tk.250; c) I propose to reduce the existing 15 percent tax rate to 7.5 percent in order to realize the desired revenue from sweetmeat shop service; d) I propose exemption of VAT at manufacturing stage on “cut fabrics and waste pieces (not exceeding one meter in length)”, “fabrics supplied free of cost as samples to the Bangladesh Standards and Testing Institution (size below three square meters)”, and “Taps and Braids” of man made fabric; and e) I propose exemption from VAT on Coconut/Copra Waste at manufacturing stage which is used as animal feed. 

Madam Speaker 

251. In order to facilitate trade and reduce production costs, I propose to exempt Advance Tax on import of the following products: a) Rice transplanters, dryers, all types of sprayer machines, potato planters used in agriculture; b) Containers of all types; c) Solar power operated water distillation plant to produce fresh water from sea salt water; d) Aircraft Engine, Turbo Jet and Aircraft Parts imported by Registered Airline.

Madam Speaker 

252. I am presenting the following proposal to ensure the health services of the people of the country: a) I propose to extend the current period of exemption from Value Added Tax (Excluding AT) and Supplementary duty (where applicable) on import of certain raw materials used in the production of sanitary napkins and diapers, for the protection of women and children, till June 30, 2024; and b) I propose exemption of VAT at the production stage on antimalarial and anti-tuberculosis drugs. 

Madam Speaker 

253. In order to reduce the consumption of tobacco products and increase revenue from this sector, I propose the following proposals on tobacco and tobacco products: a) I propose to increase the price level of low slab 10-sticks/pack cigarettes to Tk 45 and higher and supplementary duty to 58 percent. Apart from this, I propose to increase the price level of medium slab 10-sticks/pack cigarettes to Tk 67 and higher, high slab to TK. 113 and higher and premium slab to TK. 150 and higher and the rate of supplementary duty for these three slabs to remain unchanged i.e 65 percent. Besides to ensure supply of cigarette at MRP, I propose to bring necessary amendments in the relevant notification. b) I propose to keep unchanged the MRP of non-filtered 25- 172 stick/pack bidi at tk. 18, 12-stick/pack bidi at tk. 9 and 8- stick/pack bidi at tk. 6 and 30 percent supplementary duty for all. I also propose to continue existing price of filtered 20- stick/pack bidi at tk. 19, 10-stick/pack bidi tk. 10 and supplementary duty 40 percent for all. c) I propose to continue the supplementary duty at 55 percent with an increase of Maximum Retail Price of Jarda to tk. 45 per 10 grams and Maximum Retail Price of Gul to TK. 23 per 10 grams. 

Madam Speaker 

254. With the intention of building a Smart Bangladesh as directed by the Honorable Prime Minister, all activities under the Value Added Tax and Supplementary Duties Act, 2012 starting from registration of VAT to filing of returns can now be done from anywhere on the digital platform. Already 100% registration is done online and most returns are filed online. Currently, online payment of VAT revenue is made through E-payment and AChallan. As a result transparency and accountability has increased in the functioning of respected VAT payers, VAT collectors and VAT officials. Apart from this, the installation of Electronic Fiscal Device (EFD)/Sales Data Controller (SDC) is going on in order to ensure the revenue collection from various types of retail, wholesale and services. EFD/SDC machines have already been installed in various sectors. Besides, an agreement has recently been signed with a private sector company to install EFD/SDC machines on revenue sharing basis with a view to expanding VAT net. Installation of EFD/SDC will start as per the agreement very soon. It may be noted that exemptions given in various cases are being phased out in order to increase tax-GDP ratio. By adopting the above measures, it is expected that the desired success in VAT collection will be achieved. Besides, I strongly believe that Value Added Tax will make a significant contribution in making a developed and smart Bangladesh by 2041 as per direction of the Honorable Prime Minister. Import-Export Duties-Taxes 

Madam Speaker 

255. Bangladesh is moving forward to be transformed into a higher middle income and eventually developed country. To facilitate this continued trend of development, protection of domestic industries, providing assistance in diversification of export-oriented industries and increasing the competitiveness of domestic industry are important prerequisites. Such measures are also conducive to higher revenue collection. With a view to materializing “Made in Bangladesh”, tax exemptions and tax concessions, albeit rationally applied, should be continued and the existing tariff rates at the import level should be gradually reduced to meet the challenges of graduation from the least develop country category. Judicious reduction of incentives is required to encourage capacity building of domestic industries. Proper identification and redressal of Anti Export Bias and gradual reduction of tariff rates will be a key factor for signing Preferential Trade Agreement (PTA) or Free Trade Agreement (FTA) with our important trading partners. These forward-looking measures will also help us to face the challenges of post LDC graduation. However, recent global economic turmoil has posed a serious challenge to achieving the expected growth target of Bangladesh. Subsequently, foreign exchange crisis has caused reduction in imports of all types of goods, which in turn has already disrupted the normal flow of revenue collection. With a view to achieving the aforesaid objectives, to finance the development activities of the country, with the purpose of increasing revenue and moreover, to achieve the expected growth target of the country, I am now presenting the budget proposal of Fiscal Year 2023-2024 before this august house through you: 

Madam Speaker 

256. The following points have been taken into consideration while making proposals regarding duties and taxes at import stages such as Customs Duty (CD), Regulatory Duty (RD), Supplementary Duty (SD) and Value Added Tax (VAT): ▪ Make the best use of existing opportunities and take necessary steps to face the challenge of LDC graduation by 2026; ▪ Creation of congenial environment for investment, employment creation and preservation of foreign exchange; ▪ Export-oriented industrial diversification and incentives to its 175 backward linkage industries; ▪ Growth and development of health, agriculture, fisheries, livestock, electronics, ICT sectors and heavy industries; ▪ Improvement of Bangladesh's position in terms of foreign investment; and ▪ Rationalization of Tariff with a view to increasing domestic revenue, development and protection of local industries. 

Madam Speaker 

257. In the current fiscal year 2022-23, the existing 6 (six) tier Customs Duty (0%, 1%, 5%, 10%, 15% and 25%), mandatory 3% Regulatory Duty on goods subject to highest customs duty, 12 (twelve) tiers of Supplementary Duty (10%, 20%, 30%, 45%, 60%, 100%, 150%, 200%, 250%, 300%, 350% and 500 %) is proposed to be continued in the next fiscal year 2023-2024. Besides, it is proposed to keep the existing duty rates unchanged on essential commodities, fertilizers, seeds, lifesaving drugs, and some other industrial raw materials. LDC Graduation & Tariff Rationalization: 

Madam Speaker 

258. After the graduation from the least developed country category we have to align our existing tariff with the best practices of the world and related regulations of the World Trade Organization. To this effect, we will have to address the inconsistencies in the tariff structure and rationalize it in line with our national priorities. The best way to address the issue is to phase out the tariffs which are not compatible with our commitment to the WTO. To this end I believe, withdrawing the tariff value, minimum value, regulatory duty and supplementary duty in phases is a good way forward. To implement this strategy, I propose the following things: 

259. In continuation of the previous fiscal year, it is recommended– ▪ to withdraw the minimum value of products under 35 headings ▪ to rationalize the minimum value of products under 9 headings ▪ to re-fix the minimum value of products under 6 headings ▪ in the upcoming fiscal year 2023-2024. To implement the above decisions, it is recommended to cancel the minimum value notification issued in the current fiscal year and issue a new notification for the next fiscal year. (Table-1 in Annex-B). 

Madam Speaker 

260. As part of the phased withdrawal of regulatory duties and supplementary duties, certain products have been selected. Products have been selected in such a way that ▪ withdrawing duty on those will not affect the protection of the domestic industry; ▪ will not be able to compete with our local product even if it is imported into Bangladesh; ▪ is not culturally intended; ▪ does not have a strong demand in this country and ▪ will have little or no impact on revenue. ▪ On the basis of these criteria, I propose the following for the next fiscal year 2023-2024; ▪ withdrawal of supplementary duty on 234 products; ▪ withdrawal of regulatory duty on 191 products; (Table-2 in Annex-B). 

261. Details of the sector wise proposals with emphasis on the above issues are presented to this parliament with your kind consent: Agriculture Sector: 

Madam Speaker 

262. Agriculture is our priority sector. It is proposed to keep the existing duty rates unchanged on the import of the main inputs of the agricultural sector, especially fertilizers, seeds, pesticides etc. and on the staple food items, and on the import of other daily commodities. Other proposals in this sector are at (Table-3 in Annex-B). 

263. Cashew nuts are being produced in the hilly regions of 178 Bangladesh and factories have been set up to process the locally grown cashew nuts. Therefore, to protect the local industry, I propose to increase the Total Tax Incidence (TTI) on import of Shelled Cashew Nuts from 15.25% to 43%. 264. There is a difference of import duties between Fortified and Non-Fortified Basmoti Rice. To equalize the TTI, I propose to levy 15% VAT at import stage on Non-Fortified Basmoti Rice. 

265. There is a difference of VAT on imports of Nuts and Processed Nuts. In order to equalize the TTI, we propose to impose 20% Supplementary Duty on import of processed nuts and processed fruits. 266. Currently there is a difference in TTI on fresh dates and dried dates at the import level. In order to equalize the TTI of both types of dates, I propose to impose 25% CD and 15% VAT at import stage. (b) Health Sector: 

Madam Speaker 

267. Like previous years, steps have been taken to give priority to the development of the health sector. I propose to continue the existing facility of importing raw materials at a concessionary rate for production of medicines, medical products and some health care products (Table-4 in Annex-B) with continuation. 

268. In order to make the treatment of cancer patients more affordable, I propose to include one hundred more raw materials of cancer medicines in the existing notification. 

269. One of the main raw materials for the production of IV Cannula is Silicon tube. Therefore, I propose to allow the item to import at concessionary rate. 

270. In order to encourage the production of diabetic management related drugs locally, I propose to include three more raw materials in the existing notification. 

271. As tobacco products like liquid nicotine, transdermal use nicotine, etc. are harmful to health, I propose to impose 150% Supplementary Duty on those products at import stage. 

272. Electronic cigarettes and similar personal electric vaporizing devices are harmful to health. The duty rates of the complete goods and its parts are not the same. Therefore, to equalize the total tax incidence at import stage, I propose to increase the total tax incidence of parts to 212.20% to equalize it with the complete product. (c) Industrial Sector: 

Madam Speaker 

273. The importance of the industrial sector in creating employment and increasing domestic and foreign investment is paramount. Also, sensitizing the local industries for their readiness to face the transition to developing countries is also important. As a strategy to increase investment, maximum utilization of production capacity of existing industries through appropriate safeguards and multi-directional expansion of export-oriented industries, and with a view to increase revenue, I propose to reduce/increase customs duties for various sub-sectors: (Table-5 in Annex-B). (1) Elevator and Escalator Industry: 

Madam Speaker 

274. At present, some domestic industries have started manufacturing elevators. But there is 5% Customs Duty on lift and skip hoists at import stage. To encourage the expansion of heavy industries in the country, we propose to increase the existing Customs Duty to 15% on Lift and skip hoists. Also, we propose to keep the said concession notification in force till June 30, 2025.

 275. As escalator is not a capital equipment, we propose to increase the existing customs duty from 1% to 15%. At the same time, I propose to exclude the product from the notification regarding import of capital machinery, spare parts and equipment. (2) Cement Industry: Madam Speaker 

276. Specific Duty of only Tk 500 per metric ton is currently in force on import of cement clinkers for the last ten years. At present the country is self-sufficient in cement production. Therefore, for the sake of rationalizing the Customs Duty and increasing the revenue, I propose to increase the existing specific rate of duty of cement clinker from 500 taka to 700 taka per m.ton. Besides, I propose to increase the specific rate of duty from Tk 750 to Tk 950 for commercial importers. (3) Tourism Industry: 

Madam Speaker 

277. To support the expansion of hotel industry in Bangladesh, a notification for importing materials at concessionary rate is in place for a decade. As many large-scale and high-quality hotels have already been built under this facility, it seems unnecessary to continue the duty tax exemption, and therefore, for the sake of revenue protection, I propose to withdraw the existing notification. (4) Software Industry: 

Madam Speaker 

278. Though, 5% customs duty exists on few software products, majority of the software products attract 25% customs duty. To protect the domestic software industry and to prevent false declaration and duty evasion, I propose to impose 25% customs duty and 15% VAT on the import of software. (5) Electric Panel Industry: 

Madam Speaker 

279. Several local electric panel manufacturing factories have been established in the country. At present, 1% customs duty is applicable on the import of low capacity electric panel. For the protection and development of local manufacturing industry, I propose to increase the customs duty from 1% to 10% on Electric Panel. (6) Electric Motor Manufacturing Industry: 

Madam Speaker 

280. At present Electric Motor is being produced locally. In order to protect the local industry, it is proposed to create two new HS codes for electric motor parts to enable the industry to import at a reduced rate under the capital machinery, spare parts and equipment related notification. (7) Local Bicycle Manufacturing Industry: 

Madam Speaker 

281. Domestic entrepreneurs produce sprockets and free wheels as a backward linkage industry for the local bicycle manufacturing industry. Therefore, to encourage the backward linkage, I propose to increase the customs duty from 10% to 15% on the import freewheel sprocket-wheels of bicycles. 183 (8) Local Opal Glassware Manufacturing Industries: 

Madam Speaker 

282. In the notification regarding import of raw materials for industries, concessional facilities have been given to similar industries other than Opal Glassware manufacturing industries. As a result the local Opal Glassware manufacturing industry is facing uneven competition. Hence, concessional facilities can be provided to local Opal Glassware manufacturing industries by amending the description in the existing notification. (9) Local mobile phone manufacturing industry: 

Madam Speaker 

283. The notification issued for local manufacturing of cellular phones remains in force till June 30, 2023. The tenure of the notification is proposed to be extended up to 30th June, 2024. 

284. With the advancement of technology, various new types of mobile parts are also coming in the market. The new parts are being used in the international market under different names. It is proposed to include the names of In-cell LCM Assembly and SubPCBA in the existing notification. 

285. Besides, I propose to amend the notification by adding some conditions to the existing notification to solve the complications in assessment. (10) Textile Industry Sector: 

Madam Speaker 

286. New machineries and technology has been introduced in the textile sector. To support the local industry I propose to amend the notification by adding some parts and amending the description of some products. (11) Other Industries: 

Madam Speaker 

287. Sandwich panel products are eligible for import by paying only 1% Customs Duty. This product is being manufactured in large quantities in the country. Therefore, to give protection to the domestic industries, it is proposed to increase the customs duty of the product from 1% to 5% and repeal it from capital machinery related notification. 

288. Local switch/socket manufacturing industry has been developed in Bangladesh. But these domestic industries are not able to compete with low quality cheap imported products. In order to provide concessional facilities on import of raw materials to this industry, I propose to issue a new notification subject to certain conditions. 

289. At present, many computer related products are being manufactured in Bangladesh. It is proposed to include certain raw materials and amend the description of some HS codes to provide more support to the local computer and computer goods manufacturing industry. Likewise, Proximity Cards and Tag is not a computer related product, therefore, I propose to exclude the said product from the notification regarding import of computers and computer products. 

290. At present BOPP Film production factories have been established in the country. Locally produced products are facing unequal competition in the market with imported products due to low Customs Duty rate. Therefore, I propose to increase the customs duty of the said product from 10% to 15%.

Madam Speaker 

291. As there is a difference in the total tax incidence on the import of microwave ovens and other ovens, I propose to impose same duty on all types of ovens and propose to make total tax incidence to 89.32% to prevent the tendency of false declaration and duty evasion. 

292. The local LPG cylinder manufacturing companies have been enjoying the benefit of importing raw materials at subsidized rates for a decade. Their capacity has accordingly been developed. Therefore, in the interest of revenue collection, I propose to abolish various products such as steel sheet and welding wire from the related notification and also propose to keep the notification in force, till June 30, 2025. 

293. Containers are used for import and export trade. In order to 186 create domestic entrepreneurs in this sector, I propose to reduce the total tax incidence on all types of containers where customs duty rate will be 15% on both types of containers and total tax liability will be 20% in both cases. 

294. It is proposed to reduce the existing duty on import of Turbo jet Engine from 15% to 0% to equalize with the existing duty exemption on similar products. 

Madam Speaker 

295. Currently, difference in total tax incidence of Master batch with Titanium Dioxide and Master batch with Calcium carbonate paves the scope of false declaration and duty evasion at the import stage. To address this issue, I propose to equalize the total tax incidence at 43% for both. 

296. While the customs duty rate on finished goggles is 25%, the duty on its parts is only 5%. In order to protect local industry and to prevent revenue leakage, I propose to increase the Customs Duty of parts from 5% to 25%. 

297. As there is a difference in the total tax incidence on the import of all types of face wash, we propose to impose a regulatory duty of 20% on the import of some products and make the total tax incidence equal at 89.32%.This will reduce the scope of misdeclaration at import stage. 

298. In order to protect the interest of the domestic industry, I  propose to make the existing tariff burden more consistent on the following types of products used as raw materials for the industry. The notable products are as follows: ▪ It is proposed to increase the existing regulatory duty of adhesive / glue from 0% to 15%. ▪ It is proposed to increase the existing supplementary duty on cigarette paper imported by commercial importers from 100% to 150%. ▪ We propose to reduce the VAT from 15% to 5% on Terephthalic acid, Ethylene glycol, hot rolled stainless steel in coil used as raw materials of industry etc. ▪ It is proposed to increase the existing Customs Duty of Sandpaper / Abrasive Cloth from 10% to 15% in order to provide greater protection to the local industry. 

Madam Speaker 

299. Domestic manufacturers are facing uneven competition due to the opportunity of importing PHC/SPC/PC Pile and SPC Pole products at subsidized rates by the existing power generation plants. Therefore, I propose to cancel this facility. At the same time, in order to preserve the interest of the domestic industries producing tiles and consumable products, I propose to abolish the facility of importing such products at a concessional rate under this notification. 

300. In order to resolve the legal complications, I propose to 188 amend the notification regarding import of capital equipment by establishments located in EPZ. 

301. In the budget for the fiscal year 2022-23, a separate notification was issued to provide concessional facilities to the manufacturers of LED lamps/energy saving lamps etc. I propose to make necessary amendments in the said notification. 

302. To broaden the base of fisheries industry, I propose to include Shrimp Hatchery Association of Bangladesh (SHAB) in the existing notification regarding import of raw materials in poultry, dairy and fish feed production. Besides, I propose to make the necessary amendments to the said notification based on the recommendations of the field offices and stakeholders. 

303. We propose to make necessary amendments to the notification regarding the import of raw materials for the production of motorcycles locally to resolve a few complication at the import stage. 

304. Local mould manufacturing companies have been enjoying subsidized facilities for importing raw materials. It is proposed to extend equivalent concessional facility to the similar Die industry and to include them in the related notification accordingly. 189 Existing Passenger Baggage Rules are repealed and new rules are issued: Madam Speaker 

305. According to sub-rule (10) of Rule 3 of the Passenger (Nontourist) Baggage (Import) Rules, 2016, a passenger can import gold bars or gold pieces weighing 234 grams on arrival from abroad subject to payment of all duties and taxes. In order to increase the flow of valuable foreign currency in the country, I propose to curtail the facility and decrease the amount of gold to 117 grams instead of existing 234 grams. Also, I propose to amend the existing baggage rules by incorporating the provision of confiscation of any amount of gold in excess of the declaration or brought concealed by the passenger. 

306. Under baggage rules, a passenger need to pay a total duty of Taka 2,000/- (two thousand) for every 11.664 grams of gold bars or gold pieces on arrival from abroad, I propose to increase the total duty-tax to Taka.4,000/- (Four Thousand) for every 11.664 grams of gold bars or gold pieces. (Table-6 in Annex-B). Issue, Amendment and Repeal of Certain Notifications And Orders: 

307. Presently industrial units located at BEZA are facing difficulties for importation of construction materials at concessional rate. I propose to resolve the issue by making appropriate amendment to the notification related to duty-free import of capital machinery, parts and construction materials. 

308. Proposals have been made to amend the statutory regulatory order regarding the importation of capital machinery and parts to make it more business friendly. 

309. In order to solve the complexity of assessment at import stations for raw materials, I propose to make necessary amendments to the related notification so that local manufacturers of freezer and refrigerators can use the benefit smoothly. 

310. In order to encourage theme park and amusement park in Bangladesh, I propose to include some amusement rides and make necessary amendments to the existing notification to this effect. 

311. Regulatory duty cease to exist within one year of its imposition. In order to withdraw the existing regulatory duty of the current fiscal year and to impose new ones for FY 2023-24, I propose to cancel the existing notification and issue a new one to this effect. 

312. I propose to make a necessary amendment in the notification regarding concessional facility on import of coal for use in power generation plants. 

313. Importers of Limestone were subjected to supplementary duty due to the interpretation of HS code. As this is a raw material for cement and many other industries, the resultant inconvenience has been addressed by issuing a notification. Now, to address similar issue with regard to another raw material called Dolomite, I propose to include dolomite in the same notification and make necessary amendments accordingly. 

314. According to proposals made for 2023-24 fiscal year some amendments are needed for Bangladesh Customs Tariff. In accordance with tariff schedule, I am proposing the amendments of different SROs, orders, rules, clerical mistake, explanation letters etc. Regarding Stabilization of Prices of Petroleum Products: 

Madam Speaker 

315. While the price of petroleum and its by-products fluctuates regularly in the international market, ensuring energy security is also a top priority of the government. Therefore, I propose to cancel the tariff value and minimum value of 13 products related to petroleum and its by-products and impose specific customs duty in the budget. (Table-7 in Annex-B) Amendment to the Customs Act, 1969: Madam Speaker 

316. The new customs act has been vetted by legislative division with some observations. NBR is examining those observations in line with smooth implementation and prevailing international best practices and the enforceability at the field level. Changes in the Customs act, 1969 with respect to expeditious release of goods at import stages, proper use of bonded facility by 100% export oriented industries, accounting of raw materials purchased locally or imported duty free or duty paid, incorporation of newly enacted Bangladesh Patent Act, 2022, change in the appointment of members at Customs, Excise and VAT Appellate Tribunal, etc. are proposed as follows: (Table-8 of Annex B). 

Madam Speaker 

With a view to ensuring procedural transparency to the home consumption bond, submission of Bill of Entry has been introduced by amending section 104 of the Customs Act, 1969. b) Section 114 has been amended to clarify the proper accounting of duty-free imported, duty paid and locally procured materials used in the manufacture of export goods. c) In order to rationalize the appointment of members in the Customs Excise and VAT Appellate Tribunal, section 196 2(c) has been amended to include Additional District Judge instead of district judge. Amendment to the First Schedule to the Customs Act: 

Madam Speaker 

317. For the purpose of facilitating international trade and addressing complications arising from classification issues, the clerical mistakes, inconsistencies and discrepancies identified in case of HS code, its description, customs duty, supplementary 193 duty, VAT etc. in the first schedule of Customs Act, 1969 have been diligently examined and analyzed and as an outcome, I am proposing the creation of new HS code and rationalization of the same (Table-9 in Annex-B). 

Madam Speaker 

318. If the aforesaid proposals are implemented, it is expected to help recuperate the already affected economy, speed up economic activities, develop industries, create areas for entrepreneurship and job creation, and ensure an investment and business friendly environment. In order to modernize Bangladesh Customs, the National Board of Revenue has already purchased container scanners, upgraded the network and infrastructure facilities of ASYCUDA WORLD software, all functional LCS has been brought under AW system, introduced mandatory payment of duties and taxes online to enable the taxpayer to pay duties and taxes from anywhere in Bangladesh. Customs Risk Management Commissionerate has been established. Several initiatives are underway including National Single Window Project, Bond Management project, Authorized Economic Operator etc. 

If all these projects are implemented, the clearance of import and export products will be expedited, investment and skilled manpower will be created, the wheels of the country's economy will be more dynamic and the transition to developing countries will be smooth. This synergy will help us to transform into “Smart Bangladesh” as per the dreams and aspirations of our Hon'ble Prime Minister.

From the budget speech of the Finance Minister – GreenWatch Dhaka