- Bangladesh’s mobile phone industry faces challenges due to a proposed VAT increase in the 2025-26 budget.
- Industry leaders are concerned about higher consumer prices, reduced local production, and a growing grey market.
- VAT on locally produced handsets increased from 2 percent to 4 percent.
- VAT on handsets with some local parts increased from 5 percent to 7.5 percent.
- VAT on fully imported handsets increased from 7.5 percent to 10 percent.
- The VAT hike may hinder smartphone penetration and digital expansion goals.
- The industry is already under pressure from rising taxes and policy uncertainty.
- Local manufacturing previously benefited from lower taxes, but this advantage is diminishing.
- Bangladesh’s tax rate on local production is the highest in South Asia.
- The smartphone market in Bangladesh is shrinking, with a significant drop in sales from FY21 to FY24.
- The grey market is expanding, accounting for nearly 50 percent of sales.
Source: thedailystar.net
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
