Undervaluation of dates: Consumers pay higher, NBR loses revenue

On the customs list, the maximum import price of dates is $1 (Tk106) per kg.

But in the retail market, the average price of dates – the most common fruit on the iftar menu – is Tk700-1,000 per kg, with premium quality selling over Tk1,800 or above.

It all happened due to the wrong valuation of imported dates: whatever price is paid, importers have to quote between $0.50 and $1 per kg and pay duty accordingly.

A lower valuation of dates for taxation should be a blessing for importers because the duty will be lower. It should also be a blessing for consumers because the market price will be lower.

But the reality paints a different picture as the market price and the import cost are found to be much higher than the Customs-assessed price, meaning traders are importing through under-invoicing.

And there was no benefit for consumers who had to buy dates at prices set by the traders.

Finally, Chattogram Customs corrected the rate as per the instruction of the National Board of Revenue (NBR). It raised the assessment value of dates from $1 to $2.50 per kg for packets below 2.5kg, and from $0.50 to $1.25 per kg for subpar dates imported in sacks weighing more than 2.5kg.

By the time the new rate came into force on 28 March, dates meant for Ramadan are already in the market.

According to NBR data, 32.31 million kg of dates were imported from different countries including the UAE, Saudi Arabia, Tunisia, Egypt, France, and Iraq between 1 January and 27 March. The average assessed price was Tk88.33 per kg with a total assessed value of Tk285 crore.

NBR's average assessed price of imported dates was way lower than the global price.

In 2022, around 90 million kg were imported with an average assessed price of Tk87.87 per kg and a total value of Tk790 crore.

In 2021, it was 64 million kg with an average value of Tk80 per kg and a total value of Tk512 crore.

Because of the under-assessment, the NBR is losing huge revenue every year, while money is possibly being laundered at the same time.

Junayedul Haque, an importer of dates, said, "It is not possible to import dates at Tk100. The import price of these dates is at least Tk200-600 depending on the quality. But to secure the LC facility from the bank, the import value of the goods has to be shown close to the assessment value."

The importers pay the price above the declared price through Telegraphic Transfer (TT) or other unauthorised channels, he added.

SM Nazer Hossain, vice president of the Consumer Association of Bangladesh (CAB), told TBS, "If the importers send Tk3,000 crore for importing dates through the legal channel, they have to send an additional Tk3,000-5,000 crore via an illegal channel."

Money laundering through export-import trade has long been a concern for Bangladesh.

How it happened

The NBR assesses the value of imported dates using two HS codes – one for packets below 2.5kg containing "high-quality" products valued at $1 and the other for above 2.5kg packets containing "low-quality" ones valued at $.050.

HS codes are identification codes assigned to goods for international trade. The assessed value by the revenue authorities is a product's determined valuation to calculate the appropriate tax rates, which in this case is the import duty.

The current rate of import duty on high-quality dates is 25% for packets weighing less than 2.5kg and 10% for sacks containing low-quality products weighing above 2.5kg.

A company called Madina Fruits Limited imported 88,936kg of dates from the UAE in November 2022, declaring the price as Tk106 per kg. Chattogram Customs assessed the price of that date at $1 or Tk106 per kg, accordingly.

But according to traders, the price of dates in the global market is much higher and even if an importer declared a higher price – Tk300 per kg, for instance – the Customs, till 28 March, had no choice but to assess the price of dates at $1 or Tk106 per kg and then levy 25% duty on it.

Muhammad Zaker, the owner of the importing company Al-Haramain Trading, said, "The price declared for importing dates is not the actual import price. The actual price is 3-4 times higher. Importers have to show a price closer to the assessed value because the banks do not want to open LC if the rate is higher than this."

NBR's sudden move ahead of Eid

The NBR revised the assessment value of dates upward on 28 March,  leading to a deadlock in the clearance of imported dates. Importers are not clearing 125 containers (around 3,000 tonnes) of dates, refusing to pay higher duty.

The market stakeholders fear that the price of the product will increase further in the market ahead of Eid.

Badiuzzaman Munshi, the deputy commissioner of Chattogram Custom House, said, "According to the Customs Valuation Act, we levy duty on the minimum import value of the last 90 days. So, dates were taxed at this price till now. But currently, importers are selling at higher prices in the market. On top of that, the NBR decided to increase the value to boost revenue."

The annual demand for dates in the country is about 60,000-90,000 tonnes. Of this, 40,000 tonnes are required only during Ramadan.

But if traders are under-invoicing, then how are they paying the additional import bills to the exporters?

According to a report by the US-based Global Financial Integrity, more than $11.5 billion was laundered from Bangladesh in 2015.

A study by the Bangladesh Institute of Bank Management in 2019 found that 80% of the laundered money was funnelled through the import and export of goods and services.

Badiuzzaman Munshi said, "Banks open LCs by determining the value of products based on competitive prices in different countries. Customs levies duty on imported goods based on the value of the goods mentioned in the LC. If the import value in LC is low, then customs have little to do."

But if any allegation of under-invoicing is proved, the customs authorities will file a case against the accused under the Money Laundering Act, he said.

Badiuzzaman also said the assessed value of dates has been increased as per the instructions of the NBR. Now the new value has to be applied for taxation and there is no scope for taxation on the previous value.