Staff Correspondent
\nKitty Industries limited, a local electric switch-maker, had imported raw materials at a cost of $1,460 per tonne.
\nBut the amount of duty it was charged left a bitter taste in their mouth.
\n“We imported raw materials at $1,460 per tonne, but the customs department officials wanted to tax it at a rate of $2,100,” Mohammad Zakir, an adviser to the company, told The Business Standard.
\nThe company was left with few options. If they tried to contest the cost, the port demurrage charges would pile up as the goods would lie undelivered, accumulating charges.
\n“It’s not only us. Almost everyone is in such a situation. As the opening of Letters of Credit [LCs] are down, the National Board of Revenue’s [NBR] earnings are also down. Now they need more revenue, so they are putting pressure on us,” Zakir said.
\nHe said this meant product price was increasing, which in turn was hurting consumers’ wallets.
\nIn the face of lowered earnings amid an LC crunch, customs officials are allegedly putting a squeeze on importers, overvaluing their goods and increasing the cost of doing business.
\nConsequently, the additional expenses are passed on to the consumers amid high inflationary pressure, according to businesses.
\nThis is particularly damaging to the business competitiveness of the country’s exporters, who heavily rely on imported goods to produce export products.
\nTraders say despite the prices of imports falling after a turbulent global market situation, customs officials still refuse to accept lower valuations.Examples of such arbitrary practices abound.
\nIn support of such claims, TBS obtained nine bills of entry \u2013 a legal document filed by importers or customs clearance agents on or before the arrival of imported goods \u2013 for various raw materials from a leading business organisation.
\nAnalysis of those showed that the Chittagong Customs House had assessed an additional 2%-83% over the invoice values, increasing the duty on the imports.
\nOn condition of anonymity, a top level official of the business organisation, told TBS, “Because of this, we have to pay several crores as duty. This has increased our production cost and it is hurting business.”
\nImporters also expressed fears that the VAT office would collect additional value-added tax (VAT) on the goods due to the high import price.
\nThree more importers told TBS they were charged higher prices than the actual import price.
\nLast Wednesday, during the pre-budget discussion with the NBR, two leading business organisations of the country \u2013 the Metropolitan Chamber of Commerce and Industry (MCCI) and the Foreign Investors Chamber of Commerce and Industry (FICCI) \u2013 raised this issue.
\nOfficials at the NBR, however, say the claims are unfounded.
\nMasud Sadiq, an NBR member who heads the revenue board’s Customs Policy department, pointed out the business practice of under-invoicing. At the meeting of the NBR, he said, “Many times [importers] do not report the correct value, which is why we set the value.”
\nA former member of the NBR, Md Farid Uddin, also said there were complaints of under-invoicing.
\n“Not everyone shows a fair price,” he said, adding that sometimes the importer, bank or clearing and forwarding agent does not provide all the documentation or information required.
\nAccording to NBR sources, the customs department currently determines the product value based on the value of import data stored in a software called ASYCUDA World.
\nThe price of the same product is determined based on the average price charged for the product in the previous three months.
\nIn this regard, Md Saiful Islam, president of the MCCI, said, “In the present reality, most of the time the database price or record price is considered as the tariff price, completely ignoring the invoice value of the product.”
\nHe said, “Prices fluctuated regularly due to Covid-19 and the Russia-Ukraine war. Due to this, the historical value will not match the present value.”
\nDemurrage rising, competitiveness falling
\nAs importers disagree with customs valuation \u2013 which they considered excessive \u2013 goods are being stuck in ports and the demurrage cost is making businesses expensive.
\nMd Farid Uddin, the former NBR member, told TBS, “An importer recently had to pay Tk70 lakh at the Chittagong Port Authority as demurrage. Shortly before that, another trader had to pay Tk60 lakh.”
\nHe said, “You cannot collect much revenue through this kind of assessment. But as a result, the industry has to count increased costs and it suffers in turn.”
\nHe said to make the business environment competitive, fair, friendly and free of harassment, the duty has to be calculated according to the transaction value.
\n“What is happening in Bangladesh is against international standards and the World Trade Organization’s policy,” he said.
\nImpacts can be significant and far reaching
\nBusinesspeople from top performing sectors like garments, textile, packaging etc. talked with TBS explaining how overvaluation is having a range of impacts. All of them sought anonymity.
\nThe most often expressed concern of the businesses was rising business costs because of overvaluation of imported goods leading to higher customs duties and taxes.
\nThis will force businesses to increase prices which would be passed on to consumers, they said.
\nAt the same time, the hikes may make it harder for companies to compete in the global marketplace, leading to a decline in the country’s overall competitiveness, they expressed their concerns.
\nThey also feared that the overvaluation has the potential to create trade barriers and hinder the flow of goods and services across the border, resulting in strained trade relations.
\nA considerable impact will also be felt with the economy slowing down as businesses cut back on investments and hirings while consumers reduce spending, they commented.
\nSolutions in sight
\nThere are, however, ways to solve the current crisis.
\nAutomation, a valuation module, integration, supply chain monitoring and risk management can all help solve the problem.
\nFarid Uddin, the former NBR member said, “Developed countries follow the valuation module, so the importance of risk management is emphasised. Under this arrangement, the importers’ past records should be used to create a profile for risk analysis and then it should be stored in the ASYCUDA database.”
\nMd Saiful Islam said, “It is possible to know the actual import price by implementing the automation system through the database and updated information of the international market.”
\nMasud Sadiq of NBR also said they were in the process of subscribing to sites such as Alibaba and Reuters, which regularly update price lists of various goods.
\nAbout 8,000 bills of entry are submitted daily to six customs houses in the country, of which Chittagong Customs House processes around 6,000.
\nHighlighting his experience, Farid Uddin said, “There is a less than 10% risk of mis-declarations for import consignments. The NBR should then have a risk analysis of which importers do this and which don’t. The price of imports, sales, etc can be looked up in the updated price list in the world market.”<\/p>\n","protected":false},"excerpt":{"rendered":"
Staff Correspondent Kitty Industries limited, a local electric switch-maker, had imported raw materials at a cost of $1,460 per tonne. But the amount of duty it was charged left a bitter taste in their mouth. “We imported raw materials at $1,460 per tonne, but the customs department officials wanted to tax it at a rate of $2,100,” Mohammad Zakir, an adviser to the company, told The Business Standard. The company was left with few options. If they tried to contest the cost, the port demurrage charges would pile up as<\/p>\n","protected":false},"author":1,"featured_media":819,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"limit_modified_date":"","last_modified_date":"","rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[3],"tags":[],"class_list":["post-818","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bangladesh"],"jetpack_publicize_connections":[],"_links":{"self":[{"href":"https:\/\/dailyenglishtimes.com\/index.php?rest_route=\/wp\/v2\/posts\/818","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dailyenglishtimes.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dailyenglishtimes.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dailyenglishtimes.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dailyenglishtimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=818"}],"version-history":[{"count":1,"href":"https:\/\/dailyenglishtimes.com\/index.php?rest_route=\/wp\/v2\/posts\/818\/revisions"}],"predecessor-version":[{"id":820,"href":"https:\/\/dailyenglishtimes.com\/index.php?rest_route=\/wp\/v2\/posts\/818\/revisions\/820"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dailyenglishtimes.com\/index.php?rest_route=\/wp\/v2\/media\/819"}],"wp:attachment":[{"href":"https:\/\/dailyenglishtimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=818"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dailyenglishtimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=818"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dailyenglishtimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=818"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}