Bangladesh is preparing to phase out tariff protection as it moves towards becoming a middle-income country. The government aims to eliminate protective trade taxes in the upcoming budget to align with Bangladesh’s graduation. Initially, duties such as Supplementary Duty (SD) and Regulatory Duty (RD) on selected imports, including fish, frozen stakes, and certain fabrics, will be waived. Over 2,000 tariff lines have been identified for the phased elimination of SD and RD by 2026. The reduction in trade taxes aims to enhance competitiveness and reduce price distortions, as economists and development partners have long recommended. Sectors that are already import-substituting will be less affected by these changes. The government’s fiscal measures also target inflation control and the expansion of the tax net. The move toward lower trade taxes aligns with international expectations and the gradual shift to collecting more revenue from direct taxes.
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