Cement makers call for tax rationalisation

Cement manufacturers have urged the government to rationalise the duties and taxes levied on the imports of raw materials of cement, saying the tax hike in the last budget has become a burden for them and is hurting their businesses.

In a letter to the National Board of Revenue (NBR) on Sunday, the Bangladesh Cement Manufacturers Association (BCMA) said the government in the budget of FY23-24 raised the customs duty (CD) to Tk700 against imports of per ton clinker, the main raw material for the industry. But the cement industry, before the budget was passed, requested the government to reduce the CD to Tk200 from Tk500.

Now the effective rate of CD against clicker imports surged to 14.3%, which would come down to 4.08% if the CD rate is brought down to Tk200, the BCMA said.

The tariff value, the lowest allowable price the NBR considers while imposing duties, has been abnormally higher and it should be rationalised, it said in the letter.

For instance, the association said, the actual import value per tonne of clinker is $43-45 nowadays and the industry is paying duties and taxes based on a tariff value of $60. Besides, for other raw materials such as slag and gypsum, the tariff value is much higher than the actual import values.

Companies have long been paying the additional taxes because of the inflated tariff value, said BCMA President Alamgir Kabir in the letter.

Higher advance income tax (AIT) is another consequence of it. The AIT should be 0.5% instead of the existing rates of 3-5% for imports of different raw materials, the BCMA said.

Amid rising prices, demand for cement dropped and its sales dropped by 6% in the 2022-23 fiscal year. The government's infrastructure construction also halved.

The 2% AIT during sales was a double and unfair taxation, the BCMA said, adding that AIT should not be an ultimate tax liability because a company might end up with no profit.

AIT during cement sales should be lowered to 0.5%, the BCMA said.