Importers Oppose Withdrawal of Duty Relief, Warn Smartphone Prices May Rise by 25%

Mobile phone importers have warned that smartphone prices in Bangladesh could increase by up to 25 percent if the temporary customs duty relief expires after June 30. The industry fears that higher taxes may encourage grey market expansion and weaken long-term revenue collection.

Smartphone prices in Bangladesh may rise significantly from July if the government does not extend the existing import duty relief, according to the Mobile Phone Industry Owners Association of Bangladesh (MIOB).

The association said that a special government notification issued on January 13 reduced customs duty on smartphone imports from 25 percent to 10 percent. That temporary facility is scheduled to expire on June 30.

If no extension is granted, customs duty will return to 25 percent from July 1, increasing the effective tax burden from 43.43 percent to 64.25 percent.

Market statistics indicate that local production of many mid-range, premium, and flagship models from Apple, Google, Motorola, Huawei, Samsung, and Xiaomi is not economically viable. Due to limited market size, complex supply chains, and specialized components, these devices rely on imports.

According to MIOB estimates, retail prices of imported smartphones may increase by around 20–25 percent.

Estimated impact includes:

• A smartphone currently priced at BDT 50,000 may rise to BDT 60,000–62,000
• An BDT 80,000 device may cost an additional BDT 16,000–20,000
• Premium smartphones priced at BDT 100,000 may become BDT 20,000–25,000 more expensive

The association noted that smartphones have become essential tools for banking, education, business, freelancing, e-commerce and public digital services.

Importers also claim the reduced duty introduced earlier this year contributed to stronger legal imports, wider model availability and healthier formal sales channels.

However, they warn that restoring higher duties may widen the price gap between official and unofficial devices and strengthen the grey market.

Why might the gray market expand?
The gray market has long been a major challenge in Bangladesh's smartphone market. Phones entering the country unofficially are typically exempt from duties and other taxes, making them comparatively cheaper.
According to MOIB, if the new tax structure takes effect from July 1st, the price gap between official and unofficial devices will widen further.
If the same model phone sells for BDT 15,000 to 25,000 more in the official market, many buyers may opt for cheaper alternatives.

The organization warned in a letter that this situation would further encourage the gray market. Consequently, legitimate imports could decrease, and transactions outside formal sales channels might increase.

According to MIOB, higher tax rates do not automatically guarantee higher revenue. If legal imports shrink and informal sales increase, total government revenue may ultimately decline.

//DBTech/HTAH/DHE//