Bangladesh Association of Pharmaceuticals Industries welcomes duty and VAT exemptions on raw material imports

The Bangladesh Association of Pharmaceuticals Industries (BAPI) views the proposed extension and enhancement of duty and tax exemptions on the import of raw materials for the pharmaceutical sector in the FY2025-26 budget as a positive move. The association believes such decisions by the government will further strengthen the country's pharmaceutical industry. 

According to the association, the proposed duty exemptions for importing raw materials used in Active Pharmaceutical Ingredients (API) will significantly help develop the API industry. In particular, this will facilitate the marketing of high-cost cancer medications, reads a press statement issued by the association today (5 June).

It is noteworthy that currently, about 90% of APIs are imported. This revised tariff policy is expected to help reduce dependency on imports and promote the domestic API industry. As a result, local production of many APIs will increase, leading to price stability and greater availability of cancer treatments. Ultimately, the general public will benefit from better access to high-quality, advanced medicines made in Bangladesh.

BAPI also expresses hope that the pharmaceutical sector, with some additional incentives, can emerge not only as a key supplier for the domestic market but also as a major export-oriented industry.

One additional issue the association highlighted is the current high duty on sandwich panels and laboratory furniture used in pharmaceutical projects. Previously, the duty rate was only 1%, but it has since increased significantly. BAPI urges the relevant government authorities to address this matter and restore the previous low-duty rate for panels, particularly for new pharmaceutical projects.

In his budget speech, Finance Adviser Salehuddin Ahmed stated, "To bring all citizens under universal healthcare by 2030, special emphasis has been placed on expanding services, improving infrastructure, and recruiting skilled personnel." He also mentioned steps taken to accelerate the recruitment of doctors, nurses, technicians, pharmacists, and health assistants, alongside plans to create necessary new positions. The finance adviser proposed duty and tax reductions on importing medical equipment and machinery for referral hospitals and all hospitals with over 50 beds. Responding to this, BAPI noted that such facilities will greatly benefit patients and improve medical services in the country.

Additionally, this year's budget proposes conditional VAT exemptions on general and ICU ambulances, including hybrid and electric vehicles, until 30 June 2030. BAPI believes this measure will play a significant role in improving public healthcare services.

BAPI appreciates the government's commendable initiatives in this year's budget. However, it emphasises that the successful implementation of these initiatives depends on the commitment and integrity of the officials at the National Board of Revenue and other relevant authorities.

Alongside the proposed benefits, BAPI requests that the following points also be considered and included in the final budget:

1. Corporate Tax for Non-Listed Companies:

The minimum corporate tax rate for non-listed companies was 25% in the previous fiscal year. However, it has been increased to 27.5% in the proposed budget. Given that most pharmaceutical companies are already struggling due to rising costs, this increase will impose an additional burden. BAPI urges the government to retain the previous 25% tax rate.

2. Personal Income Tax Threshold:

The proposed budget does not raise the tax-free threshold for individuals, and some changes in conditions will result in increased tax for employees in the sector. This will effectively reduce their real income. BAPI requests the government to reconsider this matter.

3. Minimum Corporate Tax on Gross Turnover:

The proposed budget sets a minimum corporate tax of 1% on gross turnover, up from the previous 0.6%. As many pharmaceutical companies are currently struggling to generate profits, this increase will severely impact their operational capacity. Companies that are not making profits will have to pay this tax from their capital, which is unjustifiable. BAPI strongly appeals to revert the minimum tax rate to its previous level.