Tariff Structure

This is the fourth publication of The Operative Tariff Schedule (OTS), which is intended to serve as a reference manual on prevailing import taxes in Bangladesh. It has been compiled primarily for the benefit of the trading community, customs officials, computing system supervisors, government ministries, research institutions and international organizations.

The OTS displays, in a single document, the operative rates of Customs Duty, VAT and Supplementary Duty, Tariff Values, and QR (quantitative restriction) status of goods. The OTS 1999-2000 has been updated in accordance with Budget Notifications issued on June 10, 1999, revisions in statutory and supplementary rates of duty contained in the Finance Act 1999 and several Statutory Regulatory Orders (SROs) of the Internal Resources Division/National Board of Revenue in force as on August 12, 1999. Efforts have been made to reflect operative rates of duties and taxes with precision using a computerized database that consolidates rate information from all the legal sources listed above. Yet, in the event of a conflict between the provisions of any SRO and information contained in this OTS, the SRO will prevail.

This year’s document has been further simplified in order to make it significantly user-friendly. Improvements in format and presentation of the OTS are still possible and suggestions from users would be welcome. Suggestions can be sent to the following address:

The database for the OTS was compiled by the CIS Cell, Excise, Taxes and Customs Data Computerization (ETAC) Project at the National Board of Revenue. The dedicated services of staff of the ETAC Project are thankfully acknowledged.
Abdul Muyeed Chowdhury
Chairman
National Board of Revenue
Segun Bagicha, Dhaka 1000
August 12, 1999.

Technical Note to the Operative Tariff Schedule 1999-2000

Advisory Note: Users of the OTS are advised to read through these 'General Rules for Interpretation' before proceeding to consult the schedule for specific duties or taxes.

In its structure, the OTS 1999-2000 conforms to the Bangladesh Customs Tariff (BCT) 1995 which is the basis for assigning eight digit legal H.S. Codes to various items of imports. Detailed notes about groupings of commodities under each chapter and heading may be found in the BCT at the beginning of each chapter. However, the BCT has only 6106 records (specifying statutory rates of duty) in comparison to about 24330 records in the OTS. The additional entries have been made to clearly indicate, in each line, general or concessionary rates of duty and tariff values, for items within each H.S. Code listed in the BCT.

There are TEN columns in the OTS, organized as follows:

Column 1 (HSCODE)Harmonized System Codes (H.S. Codes) for classification of goods in accordance with Customs Cooperation Council Nomenclature (CCCN), the Harmonized Commodity Description and Coding System (Harmonized System, for short). Arranged in 98 chapters (chapter 77 is omitted), the Harmonized System provides a logical structure for the classification of commodities grouped under a total of 1242 headings. Each heading is a four-digit code whose first 2 digits represent the chapter in which the heading appears while the remaining 2 digits indicate the serial order in which the heading appears within the chapter. For instance, HS Code 27.08 (PITCH AND PITCH COKE, OBTAINED FROM COAL TAR OR FROM OTHER MINERAL TARS) indicates the eighth heading in Chapter 27, a chapter covering Mineral Fuels, Mineral Oils and Products of their Distillation; Bituminous Substances; Mineral Waxes.

In addition, all but 257 of the 4 digit headings have been divided into subheadings, which are identified by 6 digit codes, whose first four digits are the same as the heading itself. To provide a greater degree of definition for specific goods, or to allow the application of different duty rates, the Bangladesh Customs Tariff 1995 (BCT) extends 6 digit HS Codes to 8 digits, thus creating 1734 additional tariff items beyond the 6-digit CCC codes. There are 6106 unique 8-digit HS Codes in the OTS99-2000.

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Column 2 (TC) Tariff Codes This column describes, via 2 digit codes, the existence or non-existence of concessional rates of duty or taxes, as well as certain special characteristics applicable to specific H.S Codes or their extensions. Following is a classification of TCs: 10-74= concessional rates of duty; TV=tariff values; 90= specific rates for gold under heading 7108; 99= statutory rates of duty (SRD). SRDs are the legal maximum rates of duty to be found in the BCT 1995. Where concessionary rates (10-74) apply, SRDs become inoperative.

--------TCs 10-74 are used to describe various concessionary rates of duty applicable to HS Codes listed in various S.R.O.s currently in force. Thus TC 10 indicates general exemption from SRD in accordance with SRO No.125-Law/99/1788/Customs, dated 10/06/99, TC 11 indicates general exemption under certain condition, SRO No. 124-law/96/1976/Cus, dated 28/07/96 for Hatching egg and SRO No. 151-Law/97/1709/Customs, dated 08/07/97 for Taxi Cab, TC 15 indicates general exemption within certain period, SRO No. 225-Law/99/1800/Customs, dated 28/07/99 for Textile Industries and Scarp Vessel [valid upto 31/12/99].

--------TCs 20-74 identifies certain special exemption/concessional rates granted to certain critical imports such as capital machineries for industrial use [TC=20&21, vide SRO No.126-Law/99/1789/Customs. dated 10/06/99]; capital machinery for 100% export-oriented industries [TC=30&31, vide SRO No. 228-Law/95/1650/Customs dated 21/12/95]; electrical goods [TC=40&41, vide SRO No.152-Law/97/1675/Customs, dated 12/06/97]; agricultural inputs [TC=50,51&52, vide SRO No. 237-Law/91/1406/Customs, dated 06/08/91 [Customs Duty Rate changed from 30% to 15% for Annex-II, SRO No.115-Law/93/1512/Customs, dated 10/06/93] & XXVI-Law/94/1555/Customs dated 09/06/94 for fisheries]; pharmaceutical inputs [TC=60-6E, vide SRO No. 114-Law/93/1511/Customs dated 10/06/93, Order 07/96/Customs, dated 31/12/96, Order 57/98/Customs, dated 22/09/98, Order 58/98/Customs, dated 22/09/98]. TC=70,71,72,73&74 identifies concessional imports originating from countries signatory to certain bilateral/multilateral agreements, namely, Bhutan, Bangkok and General System of Trade Preferences (GSTP) Agreements [SRO Nos. 306-Law/89/1229/Customs, dated 13/09/89, 229-Law/95/1651/Customs, dated 24/12/95 and 330-L/90/1334/Cus, SAPTA Agreement Vide SRO No. 54-Law/97/1697/Customs dated 26/02/97, respectively]. For details about which importers are entitled to concessionary rates and the conditions that apply, the referenced SROs need to be consulted. Generally speaking, concessionary rates within an HS Code are available to licensed industrial users only. For other commercial importers, the higher general rate applies.

TC TV does not indicate any concessional rate of duty, but merely identifies items with tariff values associated with specific H.S. Codes as contained in Notification No.75/99/Customs dated 19/05/99. These TVs, stated in US dollars, are fixed C&F prices of imports from various origins and are used for valuation purposes only. [NBR fixes TVs under Section 25(7) of the Customs Act 1969]. Where a TV exists, it forms the basis for duty calculation regardless of what the declared C&F value of the imported item is. For non-TV imports, valuation certified by NBR approved offshore pre-shipment inspection (PSI) agencies will form the basis for customs assessment. If such certification is not presented, customs stations might use indicative values or C&F values for assessment. An operative tariff rate is not specified with TV entries. The actual applicable rate of duty for TV items will depend on the appropriate general or concessionary rate applied on these imports. [Example: If a machinery exemption (TC=20&21) is applicable to the imported item, then the appropriate rate will be the machinery rate (i.e. 5%). If the same item is not entitled to such exemption (if the import is not destined for an industry), the general rate (TC=10&11) will apply. Consider HS code 8501.52.00 (TC=TV). Electric motor, 1/4 HP, has a tariff value of $22 per pc. The duty rate for this item could be 30% (if the importer is not entitled to any exemption but the general one, 10), 5% (if the importer is entitled to capital machinery exemption, 20), or 0% (if the import is meant for a 100% export-oriented industry).

--------TC 90 has been assigned to only three H.S. Codes under heading 7108, namely, 7108.12.00, 7108.13.00 and 7108.20.00 covering monetary and non-monetary gold. These are the only items subject to import duty at specific rates, SRO No.125-Law/99/1788/Customs, dated 10/06/99.

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Column 3: HARMONIZED DESCRIPTION: Provides harmonized description of commodities corresponding to 4- through 8-digit H.S. Codes as specified in the Bangladesh Customs Tariff which classifies commodities in accordance with the formulation of the Harmonized System. In addition, specific descriptions recorded in relevant SROs have also been used for ease of identification. Frequently used abbreviation: nes = not elsewhere specified.

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Column 4 (OPT) : Operative Tariff: This is the critical column for the importer or user. The Operative Tariff is the applicable customs duty. Although the statutory rate of duty (SRD) is the legal tariff, the existence of general and specific exemptions by revenue notifications (S.R.O.) issued periodically by NBR/Ministry of Finance under the Customs Act, 1969 quite often render them inoperative. Where no exemptions apply, the SRD is of course the operative tariff and the corresponding TARCODE in column 2 is 99. However, where general or specific concessions apply to items within a 8-digit HS Code, the operative tariff is the applicable rate of customs duty appearing in this column with an appropriate Tariff Code (TC) in column 2. For instance, the operative tariff rate for HS Code 0806.10.00 fresh grapes, is 37.5%, as the item is subject to a concessionary rate (TC=10) given under SRO No. 125-L/99/1788/Customs. A few HS Codes have indicative tariff of 999.99 [e.g. 8706.00.00] to indicate rates for Chassis fitted with engine for motor vehicle heading No. 87.01 to 87.05 where the same rate applies as the rate for the original vehicle. The OTS description is so arranged that each line, beginning with an HS Code and having a TC other than TV, be identified by a single operative tariff. Lines with TC=TV describe tariff values only.

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Column 5 (VAT) : VAT rate is uniformly 15% with exemptions provided under specific SROs. The relevant valid SRO Nos. 146-Law/99/225-VAT, Table-1 and 2, dated 10/06/99. This general exemption SROs are to be read alongwith the exemptions provided in the First Schedule of the VAT ACT, 1991. Moreover, capital machineries for industrial use [TC=20&21, vide SRO No.126-Law/99/1789/Customs. dated 10/06/99]; capital machinery for 100% export-oriented industries [TC=30&31, vide SRO No.228-Law/95/1650/Customs dated 21/12/95]; agricultural inputs [TC=50,51 vide SRO No. 270-Law/94/104/VAT, dated 19/09/94 and TC=52 vied SRO No. XXVI-Law/94/1555/Customs, dated 09/06/94]. Beonds of this SRO NO. 332 Ka-Law/91/14-VAT, dated 02/11/91 grants exemption to universities, research and educational institutions, for items that are not generally exempted from VAT. It must be consulted for receiving VAT exemptions. In general, exemptions from VAT are provided, under the First Schedule of the VAT Act, 1991, to all primary unprocessed agricultural/forestry products and products of fisheries and livestock categories. Gold bullion (7108.13.00) and Two-in-one (8527.11.00) imported under Passenger Baggage Rules are also exempt from VAT [SRO Nos. 146-Law/99/225-VAT, dated 10/06/99. VAT is calculated on duty inclusive (customs and supplementary duty, where applicable) assessable value.

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Column 6 (SD) : Displays supplementary duty rates on items listed in the Third Schedule of the VAT Act of 1991, as incorporated in the Finance Act 1999. Exemptions are provided in SRO nos. 134-Law/96/136-VAT, dated 28-07-96, 268-Law/97/172-VAT, dated 20-11-97 and SRO nos. 143-Law/99/223-VAT, dated 10-06-99. Two-in-one (8527.11.10) imported under Passenger Baggage Rules is also exempt from SD (SRO no. 126-Law/98/187-VAT).

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Column 7 (IDSC) : Displays Infrastructure Development Surcharge (IDSC) rates on all imported items in Bangladesh. IDSC is collected at a flat rate of 2.5% on assessable value for imports. Exemptions from this Surcharge are provided in SRO nos. 127-L/99/1790/Customs, dated 10-06-99.

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Column 8 (MU):Indicates measurement unit for items whose tariff values are recorded in Column 9. Following is a complete list of measurement codes:

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Column 9 (TV) : Lists dollar values of imports updated vide S.R.O. No.75/99/Customs. dated 19/05/1999.

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Column 10 (QR) : Indicates QR (quantitative restriction) status of goods based on the Import Policy Order (IPO) 1997-2002 issued by the Ministry of Commerce. Four possibilities are indicated by letters F (free), R (restricted), B (banned), M (multiple possibilities, i.e. F, R or B might apply to parts of the respective H.S. Codes).

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Advance Income Tax (AIT) : Although no columns have been assigned in the OTS, an advance income tax is collected on imports at the flat rate of 3% on assessable value under the Income Tax Ordinance, 1984. However, the following categories of imports are exempted from AIT: (a) government imports, (b) imports of capital machinery (TARCODE=20 & 21), (c) imports of capital machinery for 100% export oriented industry (TARCODE=30 & 31), and (c) raw materials for industries approved by BSCIC.

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LCA/Permit Fee (LPF) : Under the License and Permit Fee Order, 1985’s paragraph-4, as amended under Import Policy Order 1997-2002 [S.R.O. No. 103-Law/98, dated 10/06/98], LPF is collected at a flat rate of 2.5% on assessable value for imports in excess of Taka 100,000/-. Exemptions from this fee are accorded to the following categories of imports: (a) government imports, (b) capital machinery/parts (TC=20&21 or 30&31) as well as some others listed in the LPF Order, 1985 which need to consulted to avail of the exemption. Further exemptions from LCA/Permit fee have been granted by Ministry of Commerce. The most important is the exemption from LCA/Permit free of all imports with zero customs duty.

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Computation of Duties and Taxes:

The following procedure is observed by customs personnel for computation of duties and taxes on imports:

Assessable Value (AV) : The determination of AV is based on the principle of valuation of imported goods under Section 25(1) of the Customs Act, 1969. AV is computed by first converting C&F value of imports in US dollars or other foreign currency into Taka by using the current month's conversion rate between US $ (or the foreign currency in question) and Bangladesh Taka as declared by Custom House, Chittagong. To the C&F value in Taka is added an insurance cost of either 1% of C& For actual amount as paid by importer. A landing charge of 1% of CIF (cost, insurance, freight) or actual charge assessed by port authorities is also added. Thus, typically, AV (or landed cost, in economic parlance) is roughly 2% above C&F OR C&F plus actual insurance cost and actual landing charge. In those instances where assessable value is based on tariff value, TV replaces C&F value except, while the procedure for insurance and landing charge assessment remain as before. The following illustration might be useful to importers for estimating duties and taxes:

Example: For a certain import, let C&F cost = Tk. 100

Insurance cost = Tk. 1 (1% of C&F) or actual

Landing charge = Tk. 1.01 (1% of C&F) or actual = Tk.102.01 or about 2% above C&F

Customs Duty (CD) :Ad valorem CD is computed by taking the appropriate rate of duty times the AV. Hence, if CD rate is 37.5%, then CD is 37.5% of AV. For the previous example, customs duty will be 37.5% of Tk. 102.01, which is Tk. 38.25.

Supplementary Duty (SD) :Like CD, SD is computed on duty paid value (Assessable value + Customs Duty). So, if SD rate is 25%, the computed value of SD in the previous example will be 25% of Tk. (102.01 + 38.26 = 140.27), which is Tk. 35.07.

Value Added Tax (VAT): The tax base for VAT is different. VAT is calculated after CD and SD are added to AV. Thus, given a VAT rate of 15%, total computed VAT in the previous example will be 15% of (AV+CD+SD), or 15% of (Tk.102.01+Tk.38.26+Tk.35.07), which is 15% of Tk.175.34. Computed amount of VAT in this case is Tk.26.31.

Infrastructure Development Surcharge (IDSC) : With few exceptions, explained above, IDSC of 2.5% on assessable value. It would also be Tk.2.56 for the foregoing example.>

Advance Income Tax (AIT): With few exceptions, explained above, AIT of 3% on assessable value is assessed on all imports. AIT in the previous example would be 3% of Tk.102.01, which amounts to Tk.3.07.

LCA/Permit Fee (LPF): LPF is computed along the same principle as IDSC, at 2.5% of assessable value. It would also be Tk.2.56 for the foregoing example.

Thus the tax breakup for an import of Tk.100 (C&F) in the previous example is as follows:

Duties (CD + SD) Tk. 73.33 (Tk. 38.26 + Tk.35.07)

VAT Tk. 26.31

IDSC Tk. 2.56

AIT Tk. 3.07

LPF Tk. 2.56

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Total Taxes/Duties/Fees Tk. 107.83

The above computation is made only for illustration of duty/tax computation and rates used in the example need not reflect actual taxes/duties.

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