MPs' duty-free car imports may face cancellation

After being elected as Members of Parliament, individuals have traditionally enjoyed the privilege of importing cars from overseas without incurring any duty. However, the National Board of Revenue (NBR) is now considering cancelling this privilege for MPs. Concerned sources have indicated that there are plans to impose a duty ranging from 5 to 25 percent on the importation of MPs' cars, leading to the abandonment of the duty-free system.

Finance Minister Abul Hassan Mahmood Ali and State Minister for Finance Waseqa Ayesha Khan scrutinized the budget specifics alongside officials from the Income Tax, VAT, and Customs Departments at the NBR Bhaban on Sunday (May 12). In the presence of NBR Chairman Abu Hena Md Rahmatul Muneem, the Finance Minister gave a green signal regarding the imposition of duty on MPs' car imports.

Earlier, in a meeting between NBR officials and IMF, it was disclosed that IMF was against the facility of duty-free import of cars for parliamentarians. Consequently, the NBR initiated the process to cancel this facility.

After meeting with the finance minister, an NBR official, speaking anonymously to Views Bangladesh, mentioned, "The imposition of duty on MPs' car imports won't impact them. Even if it's nominal, it will contribute to revenue generation. However, if public representatives pay the duty, it may set a precedent for others to request duty exemptions."

However, the fate of the proposal to cancel the duty-free car import privilege for MPs will be decided during the meeting with the Prime Minister on May 14. According to the related sources, the final decision will be taken after the meeting with the Prime Minister.

Sources indicate that in the upcoming fiscal year's budget (2024-25), there might be a proposal to abolish the duty-free privilege for MPs on importing cars and instead implement new duties ranging from 5 to 25 percent. These proposed rates are significantly lower than the current duty rates on car imports, which vary from 89 percent to 850 percent based on the engine capacity (CC). For instance, a car priced at tk 1 lakh would currently incur an additional duty of at least tk 89 thousand, and at the maximum rate, the duty could be as high as tk 8 lakh 50 thousand.

Sources have also indicated that for the upcoming financial year 2024-25, revenue collection in the customs sector is expected to increase by tk 8.5 thousand crores. A significant portion of this increase will be achieved through arrears recovery and tariff revision. Notably, the IMF is advocating against any form of tariff exemption and has recommended the elimination of existing duty exemptions across various sectors.

According to NBR sources, between 2017 and 2023, Members of Parliament imported 316 vehicles using duty-free privileges. These cars were valued at Tk 260 crores. Calculating at the minimum 89 percent duty rate, the government incurred a revenue loss of tk 231 crores. Conversely, applying the maximum 850 percent duty, the revenue loss amounted to tk 2,210 crores.