The Bangladeshi government is considering the implementation of new tax policies that could significantly affect the domestic mobile phone manufacturing industry. The upcoming budget for the Fiscal Year 2023-24 might introduce higher taxes on local mobile phone assembly and the import of raw materials used by the industry.
Currently, mobile phone assembly incurs a 3.0-to-5.0-percent value-added tax (VAT), while certain conditions allow for the exemption of taxes on raw material imports. However, the revised tax structure may increase the tax burden on mobile phone manufacturers, potentially impacting production costs and pricing.
Imported handsets already face high tax rates, with a 58-percent tax on smartphone imports. On the other hand, the government may extend tax benefits to the local home appliance manufacturing industry to further promote the “Made in Bangladesh” brand.
Although the industry has seen significant growth since the introduction of tax incentives, some officials argue that it is now time to phase out these benefits. However, mobile phone manufacturers claim that the price hike resulting from tax adjustments has led to a decline of up to 20 percent in mobile set sales.