How to Calculate Car Import Duty in Bangladesh: A Detailed Guide

10 Dec

How to Calculate Car Import Duty in Bangladesh

Importing a car into Bangladesh involves paying various duties and taxes. The total cost of importing a vehicle is significantly influenced by these charges, calculated based on the car’s CIF value (Cost, Insurance, and Freight) and engine capacity (measured in CC).

Here’s a step-by-step guide to calculate the import duty in Bangladesh with examples.

1. Key Components of Import Duty

1.1 CIF Value

The base cost used for calculating duties includes:

Cost: The car’s price at purchase.
Insurance: Typically 1% of the car’s price.
Freight: The shipping cost to the port in Bangladesh.

1.2 Types of Duties and Taxes

Customs Duty (CD):
- Typically 25% of the CIF value.
Supplementary Duty (SD):
- Varies from 30%-500%, depending on the engine capacity.
Regulatory Duty (RD):
- 3% of the CIF value.
Advance Income Tax (AIT):
- 5% of the CIF value.
Advance Trade VAT (ATV):
- 4% of the CIF value.
Value Added Tax (VAT):
- 15% of the taxable value.
Port Charges: Nominal, varies depending on the port.

2. Breakdown of the Calculation Process

2.1 Step 1: Determine the CIF Value

Example:
- Car Cost (FOB Price): $10,000
- Insurance (1% of FOB Price): $100
- Freight: $1,500
- CIF Value = $10,000 + $100 + $1,500 = $11,600

2.2 Step 2: Apply the Duties and Taxes

Assume the car has an engine capacity of 1800cc. Based on Bangladeshi regulations, duties are calculated as follows:

Tax Component	Rate/Formula	Amount (USD)
Customs Duty (CD)	25% of CIF	11,600 × 25% = 2,900
Supplementary Duty (SD)	150% of (CIF + CD)	(11,600 + 2,900) × 150% = 21,750
Regulatory Duty (RD)	3% of CIF	11,600 × 3% = 348
Advance Income Tax (AIT)	5% of CIF	11,600 × 5% = 580
Advance Trade VAT (ATV)	4% of CIF	11,600 × 4% = 464
VAT	15% of (CIF + CD + SD + RD)	(11,600 + 2,900 + 21,750 + 348) × 15% = 5,532
Total Import Duty	Sum of all taxes and duties	$31,574

3. Total Import Cost

CIF Value = $11,600
Total Import Duty = $31,574
Grand Total (Cost of Car in Bangladesh) = CIF Value + Total Duties = $43,174

3. Important Considerations

Engine Capacity (CC):
- The larger the engine, the higher the Supplementary Duty (SD).
Type of Vehicle:
- Electric and hybrid cars are subject to lower taxes.
Depreciation for Used Cars:
- For reconditioned vehicles, a depreciation allowance is applied to reduce the CIF value based on the car’s age.
Currency Exchange Rate:
- Duties are calculated in Bangladeshi Taka (BDT), so consider the USD-to-BDT exchange rate.

4. Example for a Hybrid Car (1500cc)

CIF Value: $15,000
Tax rates for hybrid cars are reduced:
- Customs Duty: 10%
- Supplementary Duty: 30%
- VAT: 15%

Tax Component	Rate/Formula	Amount (USD)
Customs Duty (CD)	10% of CIF	15,000 × 10% = 1,500
Supplementary Duty (SD)	30% of (CIF + CD)	(15,000 + 1,500) × 30% = 4,950
Regulatory Duty (RD)	3% of CIF	15,000 × 3% = 450
Advance Income Tax (AIT)	5% of CIF	15,000 × 5% = 750
Advance Trade VAT (ATV)	4% of CIF	15,000 × 4% = 600
VAT	15% of (CIF + CD + SD + RD)	(15,000 + 1,500 + 4,950 + 450) × 15% = 3,075
Total Import Duty	Sum of all taxes and duties	$11,325

Total Cost for Hybrid Car = CIF Value + Total Duties = $15,000 + $11,325 = $26,325

5. Tips for Accurate Duty Calculation

Use the NBR (National Board of Revenue) Duty Calculator available online.
Consult a professional clearing agent for precise calculations.
Be aware of frequent updates to duty rates by the government.

By understanding these steps and tax components, you can accurately calculate the import duty for any car and make informed decisions about importing vehicles to Bangladesh.