The government plans to withdraw the existing 5% source tax on the import of gold to encourage imports through the formal channel, finance ministry officials have said.
According to the officials, this step is to prevent smuggling of the precious metal.
Under the Baggage Rules of Bangladesh Customs, an international passenger is allowed to bring up to 234 grams, which is equivalent to 20 bhoris, paying Tk2,000 tax against one bhori (11.66gm) of the imported gold.
On the other hand, a passenger can bring up to 100 grams of gold ornaments duty-free. He or she has to make sure there are no more than 12 pieces of a single type of ornament.
Gulzar Ahmed, senior vice president of the Bangladesh Jewellers' Samity (BAJUS), said the government's move to scrap the advance tax on gold imports, saying it will be beneficial for both the industry and consumers.
"We have requested the NBR to reduce our VAT to 2% from 5%. If the authorities make any positive move in this regard, it will encourage customers to pay VAT," he told The Business Standard.
Earlier, the government formulated the first-ever Gold Policy-2018 for the country, aimed at boosting the import and export of gold and ensuring transparency in its trade by bringing the gold sector of the country within a regulatory framework. The policy came into force on 29 October 2018.
This step led to some private entrepreneurs being eager to import gold in line with government rules and regulations.
Finance ministry officials have expressed hope that the withdrawal of the source tax will help the jewellery industry flourish and increase the government's revenue earnings.
As per the policy, a standard operating procedure (SOP) will be followed in establishing and operating gold refinery units.
The Ministry of Commerce issued a gazette notification, effective on 3 June 2021, allowing the import of raw gold and refining it for the first time in the country.
Local jewellers are also allowed to sell jewelry, bars, and coins made of refined gold, both in the local and overseas markets.
According to sources in the Ministry of Commerce and Industry, Bangladesh has a demand for gold up to 40 tonnes annually. Most of the demand is met by smuggled gold and the rest by recycled gold.
The size of the global jewellery market was estimated at $249.02 billion in 2021. The figure is expected to reach $269.19 billion this year.
The market will be $518.90 billion by 2030 at an annual growth rate (CAGR) of 8.5% from 2022 to 2030, according to a global estimate.
The upcoming budget will also propose reducing source tax on the import of hot-rolled coil and zinc for corrugated iron (CI) sheet manufacturers to 3% from 5%.
BDST: 1916 HRS, June 3 2022
MSK
