Importers want up to 50% depreciation facility for reconditioned vehicles
Currently, the government provides a 10% depreciation on imported vehicles 10% up to two years, 20% up to three years, 30% up to four years and 35% for four to five years depending on the manufacturing time.
Importers have called on the government to increase the depreciation facility for reconditioned vehicles up to 50% from the existing 35% for the upcoming fiscal year 2024-25 (FY25).
The Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA) made the proposal to increase the depreciation by 15% to offset effect of the strong dollar in a pre-budget meeting with the National Board of Revenue (NBR) in its headquarters at Agargaon in the capital on Monday (12 February).
Currently, the government provides a 10% depreciation on imported vehicles 10% up to two years, 20% up to three years, 30% up to four years and 35% for four to five years depending on the manufacturing time.
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Car depreciation is the process of a car losing value over time. The depreciation facility allows importers to purchase cars at a lower price than their original values.
Most cars will see their largest fall in value during the first year after they are newly registered, which is good news if you are looking to buy a car which has a few miles on the clock already. Depreciation starts to slow down after a car becomes a year old and slows down further when it reaches 3 years old.
Depreciation is often an overlooked cost when buying a new or used car, despite the fact that it can be one of the most expensive parts of car ownership.
At the meeting, stating that higher depreciation helps reduce the import price of vehicles, Md Habib Ullah Dawn, president of the BARVIDA, said, "Due to the massive devaluation of the taka the dollar, the cost of vehicle imports have increased. If the depreciation is increased by 15%, it will create an opportunity for the consumer to get cars at a lower price."
He said, "The car which we used to sell for Tk18.5 lakh, is now costing Tk24 lakh to buy. The Toyota Premio car which I used to sell for Tk35 lakh, now has to sell for Tk44 lakh. As a result, the dream of owning a car for middle-class families is fading away.
"Car imports will increase if this proposal is considered. As a result, there will be no loss of revenue, rather, it will help the government in meeting the revenue target."
Besides, to stabilise the market, the association proposed that authorities impose a cubic capacity based (CC) specific duty on vehicles, reconstruct the CC slab for hybrid cars, reduce duty-tax on sport utility vehicle (SUV) cars, and reduce supplementary duty to popularise electric vehicles.
Representatives of Bangladesh Ceramic Manufacturers and Exporters Association, Leather and Footwear Manufacturers and Exporters Association of Bangladesh, Bangladesh Tanners Association also presented their proposals in the meeting.
NBR chairman Abu Hena Md Rahmatul Muneem presided over the meeting while other budget related officers were also present.
