The demand for personal vehicles in Bangladesh has gradually increased in the last few decades due to the rapid growth of the economy and the rise of the middle class. As the middle-income population grows and lifestyles change, more and more people are choosing to import cars to fulfill their transport needs.
Despite this, importing a car to Bangladesh is quite a complex process compared to buying one from a local dealership. The import tax is one of the most essential factors that car buyers need to consider. Knowing the car import tax in Bangladesh can assist prospective buyers in making wise choices and budgeting their purchases.
This article provides an overview of the Import Tax of Car in Bangladesh, including the different types of car tax, the method of calculating it, and essential points to consider when purchasing a vehicle.
Custom Import Tax of Car in Bangladesh
Yes, you can Import Tax of Car in Bangladesh, but you have to pay some taxes to import a car in Bangladesh. The NBR imposes these taxes according to the car’s engine capacity, age, and customs valuation. Below are the different types of taxes you will face while importing a car in Bangladesh:
Customs Duty (Import Duty)
The central tax levied on imported cars is the customs duty. This is a tax that the government charges for the goods brought to the country from abroad. The value on which the customs duty on cars is imposed is the Customs Value of the vehicle, which includes the cost of the car, shipping charges, insurance, and all other charges incurred during importation.
Custom Duty is levied depending on the engine capacity of the vehicle. Thus, a car with less than a 1,000cc engine would have a lesser customs duty than a car with a 1,299cc engine, and so on. As a general rule:
Engines under 1000cc: Roughly 40%
Estimated percentage of cars with engine capacity between 1,000cc to 1,500cc: 55%
ENGINES OVER 1,500cc: Approximately 100% or more
Value Added Tax (VAT)
Apart from customs duty, Value-Added Tax (VAT) is also applicable to Import Tax of Car in Bangladesh. VAT (Value-Added Tax) is a consumption tax applicable at a standard rate of 15% for most goods and services. In the case of car imports, VAT is charged on the customs value of the car, that is, after the customs duty has been added to the cost of the vehicle.
VAT is the most significant cost when importing a car and is the first thing you need to know before planning a car importation.
Advance Income Tax (AIT)
The Advance Income Tax (AIT) is another significant taxation on imported vehicles in Bangladesh. 50,000, this tax is charged as a percentage of the vehicle’s customs value and must be paid before the notes clearance. Typically, the rate of AIT is relative to the value and type of the car. The AIT is approximately 1% to 3% of the customs value for most cars.
Supplementary Duty:
Besides customs duty, VAT, and AIT, Bangladesh levies a supplementary duty on certain vehicles. This additional tax is based on the car’s value and varies from 10% to 300%, depending on the engine capacity and age of the vehicle. For example, supplementary duties are generally higher for luxury cars and vehicles with a larger engine capacity.
Fees for Registration and Road Tax:
Once the vehicle has cleared customs, the owner must pay a registration fee to the Bangladesh Road Transport Authority (BRTA). The one-time registration fee is based on the car’s type and value. Then there is the annual road tax that must be paid by all motor vehicles, which varies according to the engine capacity and the age of the car.
- Car Import Tax Factors
TAX SLIP WHEN IMPORTING CAR TO BANGLADESH There are several reasons for the tax you must pay for Import Tax of Car in Bangladesh. These include:
Engine Capacity: As previously stated, the engine capacity of the vehicle is an essential component in determining customs duty. The bigger the engine, the more audio and additional responsibilities.
Car Vintage: Older cars usually get higher taxes, like supplementary Duty. To tackle air pollution, the Bangladesh government has imposed policies to restrict the import of older cars and encourage newer, less polluting models. These taxes or restrictions are often applied to vehicles built over a certain number of years ago (usually more than 5 to 7 years).
Customs Valuation: The customs factor of the automotive is established by the customs authorities based on the bill, transport expenses, and insurance coverage, among other factors. Higher customs value means more tax burden.
Country Of Origin: Bangladesh has trade agreements with some countries that may influence the duty rates. Because of the specific coverage of international trade deals, such as roadblocks between neighboring countries, specific neighboring countries have lower duties to import a car than countries from elsewhere, such as countries from the South Asian Free Trade Area (SAFTA) region.
How to determine duty tax for import cars in Bangladesh?
The total tax you will be charged on the importation of a vehicle involves the addition of the following:
Customs Duty: It is determined by the engine capacity of the car as well as the customs value.
VAT (15%): This is calculated on the total value once customs duty is added.
Foreign Vehicle Tax (1% – 3%): This is calculated based on the car’s customs value.
Additional Duty: We calculate this based on the engine capacity among various aspects.
After the car is imported, the owner must also pay the necessary registration and road taxes.
For instance, if you wish to import a car that costs BDT 1,000,000 and has an engine capacity of 1,200cc, your import taxes may break down as follows.
Customs Duty (55% x BDT 1,000,000) : BDT 550,000
VAT (15% of BDT 1,550,000): BDT 232,500
Advance Tax on Income (2% of BDT 1,000,000): BDT 20,000
Supplementary Duty (assuming 100% for 1,200cc): BDT 1,000,000
Total taxes = BDT 1,802,500
This is an approximation, of course, as the actual calculations depend on specific customs valuations.
Conclusion:
Import Tax of Car in Bangladesh can be great, but you need to know about the different taxes. Such taxes can be in the form of customs duties, VAT (Value Added Tax), AIT (Additional Import Tax), and others, all of which can add up to a sizable percentage when it comes to the overall cost of the vehicle. With careful planning and research beforehand, you can maximize your car importation and take some time to understand the factors that affect taxes, enabling you to estimate your overall expenditure better.
It’s always best to discuss your intended purchase with a customs broker or someone who has experience importing cars before you transfer funds overseas so you can have up-to-date information on tax rates and import policies. This will allow you to be better prepared for importation and avoid any surprise costs.
Import Tax of Car in Bangladesh can be a great option if you put in the extra hours to research all the details and focus on how the taxes will affect your purchase. A little knowledge can help you have a successful and cheaper car importation.
