14 June 2018
BANGLADESH: 2018 Budget Raises Taxes in Apparel and Cosmetics Sectors
The Corporate Income Tax (CIT) rate applicable to the readymade garment (RMG) production sector is to be raised to 15% from its current level of 12%. Companies looking to limit their tax liability, however, have the option of either listing on the country’s stock exchange (reducing their CIT exposure to 12.5%) or demonstrating their compliance with international green building standards (cutting their CIT burden to 12%).
The revision to the RMG CIT rates were among the changes announced as part of the 2018 budget review and will come into effect on 1 July, the start of the country’s new financial year. In additional moves, the new budget also saw 10% Supplementary Duty (SD) introduced for domestically-produced and imported cosmetic products, while the existing 10% SD on men’s toiletries was raised to 15%.
The new budget also raised the surcharge on imported mobile phone handsets from its present level of 1% to 2%. The duty payable on imported inputs in the domestic mobile phone manufacturing sector, however, are to be lowered, with the new rate and further details to be announced at a later date. Additionally, all imported textile inputs destined for use in the production of export items are now duty-exempt, while 5% VAT is to be levied on all e-commerce transactions, including those conducted via social media.