The National Board of Revenue (NBR) has introduced a country-neutral minimum value for customs assessment from the current fiscal year (FY) with an upward revision for the majority of products.
Minimum value is a threshold that customs authority determines through issuing Statutory Regulatory Order (SRO) for the assessment purpose.
In the Finance Act-2019, the customs wing has scrapped the provision for country-specific minimum value to ensure level-playing field for traders from across the world.
More than 700 major import products fall under the revised minimum value.
Of the products, prices of some 60 per cent would go up while the rest of the value would either be curtailed or remain unchanged.
These are the major import products that contribute around 50 per cent of the total customs duty collected by the tax authority.
A senior customs official said the NBR determines the minimum value for over a thousand import products, considering those vulnerable to under-invoicing, over- invoicing or duty evasion.
He said most of the disputes between customs officials and businesses erupted over determining those products.
Importers will not be able to quote the value of the products below the minimum value, determined by the customs.
Economists are opposed to such valuation that goes against international norms.
Dr Zaidi Sattar, chairman of the Policy Research Institute of Bangladesh (PRI), said such a minimum value or tariff value is exceptional and it violates relevant international agreement.
Bangladesh is a signatory to the agreement on valuation under the World Trade Organisation (WTO), he said.
Under the agreement, trade and taxation would be valued on the basis of transaction value, he said.
For example, prices of toothpaste could vary from Tk 10 to Tk 1, 000 or a toothbrush could be imported at Tk 20 to Tk 2,000. Ideally, the purchasing price should be the value of that product.
"Transaction value should be considered for customs assessment. Such an ad-hoc value highlights the inefficiencies of our taxation system," Dr Sattar said.
These types of value, including specific value, are non-transparent and ad-hoc measures of tax collection, he added.
When the country will graduate from the least developed country (LDC) status, such an ad-hoc value will not exist, he said.
For FY 2019-20, the customs wing has revised minimum value for some major import products including plastic, copper, aluminum, steel, milk power, base oil, lubricating oil, SIM card, tyres, fabrics, shirts, pants, panjabi, blanket, curtain, footwear, marble tiles, sanitarywear, tablewear etc,
On June 29, 2019, the customs wing has issued a gazette, determining the minimum and tariff value of the products.
In the notification, the board has instructed the customs officials to consider the minimum value at the time of assessment before slapping customs duty.
However, the board has empowered the customs officials to conduct assessment on higher value than the minimum value, on the basis of country of origin, brand and model of the imported products.
For copper, aluminum, steel, plastic and other metal and non-metal products, customs assessment value would not be lower than the threshold quoted in the internationally recognised sources such as Platts and London Metal Exchange.
Officials said until FY 19, the minimum value was determined on the country basis such as SAARC, non-SAARC, South Asian, Asian, western, and European.
There was a considerable difference in value for goods of Asian origin and that of other sources.
The NBR made the value state-neutral after demand from different business lobbyists, including the EU-Bangladesh Business Climate Dialogue Joint Working Group on customs duties, customs and trade facilitation.
In the dialogue, the European Union representatives said that the existing minimum value is creating disparity for the goods originated in the European bloc.
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