Mobile phone assemblers yesterday voiced their grievances about the National Board of Revenue's proposal for them to get tax benefits.
To gain tax benefits, every assembler must add 30 percent value and have the capacity to manufacture five components of a mobile phone—printed circuit board, charger, battery, housing and casing—in its plant.
“None of the globally famous companies—Apple, Samsung, Huawei and Transsion—manufacture devices by themselves,” said Jakaria Shahid, managing director of Edison Group, the parent company of local mobile handset brand Symphony.
No mobile handset company in the world manufacture batteries or chargers themselves, he said in a press meet at Best Western La Vinci Hotel.
Mobile assembling started in India eight years ago and local companies add around 7 percent value to their produce.
Even the world's largest assembling country China's value addition is about 25 percent only, Bangladeshi mobile assemblers said in the meeting.
“So it is totally illogical for the NBR to order us to add 30 percent value to the devices to get tax benefits as a manufacture?”
On Thursday, the NBR issued a statutory regulatory order listing 10 conditions; if any assembler fails to meet those, a 15 percent VAT will be imposed on the phones produced by the company. According to the order, the tax for local manufacturer will be 13 percent if they can follow the 10 conditions.
The VAT will be around 34.2 percent if the 15 percent new tax is added with 18.8 percent VAT the local assemblers used to pay. The import tariff for mobile handsets is 31.1 percent now.
The new tax structure will increase the cost of production and might even lead to plants shuttering; those who were eyeing local mobile phone assemble will discard the plans, they said. “How would the mobile assembly plant owners survive if the import tariff is lower than that of local manufacturing?” said Ruhul Alam Al-Mahbub Manik, chairman of Fair Group, a local business group that established a plant in Narsingdi with the brand Samsung. “We will have no other way then to shutdown our plants.”
Shahid of Edison Group said they might have to close their factory if they have to pay the extra VAT.
Not only in Bangladesh, none would find this kind of tax structure across the globe, said Manik, also the president of Bangladesh Mobile Phone Importers Association.
“This might be a conspiracy with the country's mobile industry,” said Rezwanul Haque, CEO of Transsion Bangladesh Ltd, a company that markets itel and Tecno branded mobile phones.
It took about 20 years to bring the garment industry to shape and even they are not manufacturing all the components, the mobile assemblers said. A new industry of mobile manufacturing that has started less than a year ago needs some tax benefits to survive and grow, they said.
The inconsistent policies will hurt the industry and the country in the long run and the government will find no new investor in the future, Manik also added.
The assemblers also urged the government to reintroduce the immediate past policy for the sake of establishing a Digital Bangladesh and save their investment of hundreds of crores of taka, which they made with bank loans.
They said they are hopeful that the government will consider the issues like online shopping. Last year, businesses imported 3.34 crore pieces of mobile sets worth around Tk 10,000 crore.