Tax benefits are decreasing in the budget, the price of mobile phones may increase

The tax concessions given to the mobile phone industry are reducing in the upcoming national budget. As a result, the duty on the import of mobile raw materials will increase. at the same time Local manufacturing or assembly of mobile phones is likely to increase value added tax (VAT). This may increase the price of this product.

At the same time, some conditions of the existing tax exemption facility on import of micro parts will be relaxed, according to Finance Ministry sources.

According to the relevant ministry sources, the government has planned to increase the duty on the import of raw materials of cellular phones and to impose VAT on the manufacture or addition of mobile phones to increase the value addition of local producers.

Finance Ministry sources say that mobile phone manufacturers currently pay 1 percent and 10 percent duty on the import of some raw materials. However, these duties are likely to be increased to 5 percent and 15 percent respectively in the next financial year.

Apart from this, 2 percent VAT is being imposed at the mobile phone production stage. Currently there is VAT exemption in this case. And at the addition stage, VAT is being increased from 3 percent to 5 percent and from 5 percent to 7.50 percent.

Industry insiders say the increase in duty and VAT will make cellular phones expensive and put the sector under pressure. But the government is hopeful that a strict tax concession policy will ensure at least 20 percent value addition to the country’s mobile phone industry. As a result, mobile phone plants will help in setting up and create greater employment opportunities in the country.

The country’s mobile phone industry was once completely dependent on imports. But now it has come down a lot thanks to the policy support of the government and the skill of the manufacturers.

Homegrown handsets now meet more than 70 percent of the country’s annual demand. As a result of the tax policy, domestic products are available at lower prices. At the same time, it is helping the industry to move forward.

In addition, mobile phone manufacturing units in hi-tech parks are exempted from tax for up to 10 years.

According to Bangladesh Telecommunication Regulatory Commission (BTRC) data, around 3.42 crore handsets were produced in 15 plants in the country during the fiscal year 2020-21. Also, 1.52 crore phones were imported into the country. Importers in this sector pay 38 percent tax.

The current market size of the mobile handset industry in Bangladesh is around Tk 10,000 crore. The domestic production of phones increased by 16.32 percent in FY 2020-21 compared to the previous fiscal.

Bangladesh started its journey in the smartphone manufacturing industry in October 2017. At that time, the country’s first smartphone and tablet manufacturing factory ‘Walton Digi-Tech Industries’ was inaugurated.

Other local handset manufacturers are Fair Electronics (Samsung), Edison Industries (Symphony), Alamin & Brothers (5 Star), CarlCare Technology Bd Ltd (itel and Tecno), Anira International (Unstar), Best Tycoon (bd) Enterprises Ltd (Vivo ), Grameen Distribution (Lava), Banglatronics Technology Limited (DTC), Benli Electronics Enterprises (Oppo), OK Mobile, and Mycell Technology Limited, Vibrant Software (BD) Limited, DBG Technology BD Limited, Lynx Electronics Bangladesh Limited, and RFL Electronics Ltd.