The domestic mobile phone manufacturing industry in Bangladesh is expected to face increased taxation as the government believes it has developed sufficiently while enjoying fiscal incentives. In the upcoming budget for Fiscal Year 2023-24, there may be a revision in taxes for local mobile phone assembly and the import of raw materials for the local industry.

Currently, mobile phone assembly is subject to a 3.0-to-5.0-percent value-added tax (VAT), while taxes are waived on the import of raw materials under certain conditions. In the current fiscal year, a 5.0-percent VAT was imposed on mobile handset sales and local refrigerator manufacturers, whereas previously, local manufacturing of mobile handsets and their sales were exempt from VAT.

Officials have noted that the tax burden on imported handsets remains high, with a current tax rate of 58 percent on smartphone imports. The government may also extend tax benefits to the local home appliance manufacturing industry for another year to promote the "Made in Bangladesh" brand.

While several global brands have invested in Bangladesh's mobile phone manufacturing sector following government incentives, including the local pioneer Walton, one official suggests phasing out the tax benefits for a sector that has flourished under these facilities.

However, mobile phone manufacturers have reported a decline in handset sales of up to 20 percent due to price hikes resulting from the upward adjustment of taxes.

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