Smartphones a must now but too high a tax makes them unaffordable for many

Highlights:

• Bangladesh phones cost far more due to extremely high taxes
• Import duties exceed 57–61%, raising official smartphone retail prices
• Grey-market phones evade taxes, selling 30–50% cheaper nationwide
• Local manufacturers struggle to compete amid illegal imports and high taxes
• Supply-chain uncertainty and compliance costs further inflate legal prices
• Government considering major duty cuts to align prices with regional markets

The most common request people get from close relatives, friends, or even casual acquaintances when flying in from the US, Europe, Malaysia or India is: "Bhai, amar jonno ekta phone niye ashis" (please bring me a smartphone). And many travellers happily oblige, slipping an iPhone or the latest Samsung into their luggage.

Everyone knows why: the price. In Bangladesh, the same phone often costs 80% or more than in major markets.

The astounding price disparity

The cost gap is dramatic across all major brands.

Take Apple's iPhone 17. It sells for $799 in the US – about Tk97,000 – and around Tk1.13 lakh in Dubai. But walk into an authorised outlet in Dhaka and the same device will cost around Tk1.8 lakh, according to pricing listed on Apple US and Dubai websites and Bangladeshi retailers.

It's not just Apple. Samsung, Vivo and other global brands all command a hefty premium here, compared with China, Japan, Malaysia, India and almost anywhere else.

This has created a striking contradiction: a country with lower per-capita income than its peers now forces consumers to pay the highest official retail prices for smartphones, including those assembled or "manufactured" locally.

Consider Vivo. One of its flagship models, marketed in Bangladesh as a locally manufactured handset, sells here for nearly double its China price and about 55% more than in India. Prices of non-assembled brands go even higher, routinely surpassing official rates in the US, China, Japan, or the UAE.

Infograph: TBS

The root of the problem: A crippling tax burden

Government officials point to Bangladesh's steep import duties – a cumulative 61% on smartphones – originally designed to protect and encourage local manufacturing. But industry insiders and policy analysts now say the strategy has misfired. Instead of nurturing a competitive industry, the duty structure has inflated prices, expanded the grey market and left legitimate distributors struggling in a distorted ecosystem.

And as smartphones become central to everything from education to payments, this is no longer just a middle-class complaint; it's turning into a public-policy problem. Why are phones so expensive in Bangladesh? And more importantly, will prices ever come down?

The disparity in duties compared to regional and global markets is stark.

Bangladesh currently sells 3.2-3.5 million smartphones every month, industry data shows. Around 80-85% of annual smartphone sales, nearly 30-32 million units, are Android devices, overwhelmingly dominated by brands like Xiaomi, Samsung, Vivo, Oppo, Realme, Infinix, and Tecno.

Faiz Ahmad Taiyeb, special assistant to the chief adviser for the Ministry of Posts, Telecommunications and ICT, told TBS that the government is now working with the Bangladesh Telecommunication Regulatory Commission (BTRC) and National Board of Revenue (NBR) to cut import duties on legally imported smartphones significantly. The move, he said, aims to stabilise prices and bring the market closer to regional norms.

Importers, however, say duties are only part of the story. Compliance costs, unpredictable supply chains and months-long letter of credit (LC) uncertainties have all pushed up operating expenses. 

"In other markets, supply chains are predictable," said the CEO of a leading distribution company, requesting anonymity. "In Bangladesh, uncertainty itself adds cost – and every disruption eventually trickles down to consumers."

Zakaria Shahid, president of the Mobile Phone Industry Owners Association of Bangladesh (MIOB), said that high taxes remain the single biggest factor behind the handset prices. Also, the widespread penetration of illegal phones prevents companies from operating at full capacity. "The cost of raw materials is also rising, which adds further pressure on pricing," he added.

Local vs global prices – huge difference

The Vivo X200 starkly illustrates the challenges facing Bangladeshi consumers. Priced at RMB 4,299 (Tk73,800) in China and ₹65,999 (Tk90,500) in India, the same handset officially sells for Tk133,999 in Bangladesh – a massive jump despite the country's lower average income levels.

In an official statement, Vivo Bangladesh explained that pricing varies across markets due to business regulations, manufacturing costs, environmental policies, data protection laws, and logistics. Yet, even accounting for these factors, the gap remains striking.

Unofficially imported versions of the same model are often 30–50% cheaper, highlighting the role of steep taxes and official channel costs in inflating retail prices. The scenario is the same for locally manufactured Oppo, Xiaomi and HONOR.

This pattern is not unique to locally manufactured phones. Apple and Samsung flagship models follow the worst trajectory. Apple's iPhone 17 is priced at $799 (Tk97,000) in the US, Tk103,000 in China, Tk102,000 in Japan, Tk113,000 in the UAE, Tk130,000 in the UK, and Tk113,000 in India – yet sells for Tk180,000 in Bangladesh.

Samsung's S25 Ultra costs Tk155,000 in the US, Tk108,000 in the UAE, Tk150,000 in Malaysia, Tk175,000 in India, and Tk226,000 in Bangladesh.

A Samsung official explained that the grey market pays virtually no taxes, while legal importers face nearly 60% cumulative duties. "The pricing disparity ultimately hits legal consumers," he said, noting that the gap creates unfair competition and limits access for average buyers.

Ashiq Ahmed of Gadget & Gear, a well-known tech retailer in Bangladesh, emphasised the direct impact of taxation on pricing. "A 61% cumulative tax shapes iPhone prices in Bangladesh. Reduce the taxes, and prices will drop immediately," he said, underscoring that policy reforms could make smartphones far more accessible while curbing reliance on unofficial imports.

"By comparing flagship models across regions, it becomes clear how Bangladesh's high taxation and regulatory environment magnify retail prices, creating a persistent barrier to digital inclusion," said Golam Mainuddin, president of the Cell Phone Users' Community of Bangladesh.

Ziauddin Chowdhury, country manager of Xiaomi Bangladesh, said the industry is still unable to produce many high-end models locally due to regular technology changes and Bangladesh's relatively small market size.

"Even when we assemble certain premium devices, the sales volume is too low to make pricing competitive," he added.

Chowdhury noted that local manufacturing still carries a 35–40% tax burden, which ultimately pushes up consumer-level prices despite thin profit margins. If taxes are rationalised and illegal phones are eliminated, prices in the local market will come down.

Why the price disparity

Bangladesh's steep smartphone prices are largely fueled by one of the highest import tax burdens in Asia. Officially imported devices face a cumulative tax of 57–59%, comprising VAT, customs duty, regulatory duty, and advance taxes. Even locally assembled phones carry an 18–22% tax, adding to the final retail cost.

In contrast, global markets impose far lighter duties. According to international media reports, the US charges zero import duty, leaving buyers responsible only for modest state-level sales taxes of 4–9%. The UK similarly applies no customs duty, levying a flat 20% VAT. 

Regional peers maintain lighter taxation as well: China taxes phones at 10–15%, India at 18–20% (mostly GST), Malaysia at 0–10%, and the UAE at 5% VAT. Analysts say this disparity directly inflates retail prices in Bangladesh, creating a wide gap with international markets.

Mohiuddin Ahmed, president of Bangladesh Mobile Phone Consumers' Association said, "When the US and UK can keep smartphone import taxes near zero, Bangladesh's nearly 60% levy makes devices unnecessarily expensive. A phone is not a luxury product – reducing taxes is essential for broader digital inclusion."

Grey market: Cheaper phones, bigger problems

Unofficial phone shops dominate Dhaka's retail hubs – Bashundhara City, Jamuna Future Park, Stadium Market, Motaleb Plaza and major district towns. These stores import phones from Dubai, Malaysia, Hong Kong and Singapore through informal channels, avoiding all import taxes.

They often sell phones 40–50% cheaper than official retail.

A Jamuna Future Park salesman said customers know official phones are expensive. "Why would they pay extra when they can get the same device cheaper?" he exclaimed.

This huge grey-market presence keeps official sales volumes low, making legal phones even more expensive due to limited economies of scale.

Experts largely blame the government's policy framework for this distortion. Golam Mohiuddin said it is practically impossible for any business to import and sell smartphones legally after paying such a massive tax burden. The legal import process itself is complicated and time-consuming, he added.

"If the government brings import duties down to 15–20% and makes local production tax-free, the market will immediately start to correct itself," he said.

Local manufacturers are far from being competitive

Bangladesh has around 18 assembly and manufacturing plants. Walton, Symphony, Edison and several foreign ventures supposedly meet 70–75% of local demand. But most factories operate far below capacity.

Mohammad Zahirul Islam, managing director of Smart Technologies, which began local assembly of HONOR smartphones, said, "We invested hundreds of crores, but can't compete with a phone entering through someone's handbag. Until illegal imports stop, the local industry won't survive."

He called for zero tax on local manufacturing to remain viable.

Mohiuddin Ahmed of the mobile consumers' association said official phones are double the price of unofficial ones. "Unless we fix the tax disparity, prices won't come down," he said, recommending reducing the total tax burden from 57–59% down to 25–30%, aligned with regional markets.

Md Aslam Uddin, president of Mobile Business Community, said the official market cannot grow with a 57% tax. After NEIR, prices will rise further unless duties are rationalised.

The National Equipment Identity Register (NEIR) is a government system that will verify every mobile handset on Bangladesh's telecom networks from 16 December onwards.