[🇧🇩] The U.S.A.---A Strategic Partner of Bangladesh

[Saif]

Trump’s remittance tax plan poses threat to Bangladesh

The US House Budget Committee voted late on Sunday to move forward with President Donald Trump's "One Big Beautiful Bill Act", a proposal that could make sending money back home more expensive for three lakh Bangladeshis currently living in the United States.

www.thedailystar.net

Trump’s remittance tax plan poses threat to Bangladesh

The US House Budget Committee voted late on Sunday to move forward with President Donald Trump's "One Big Beautiful Bill Act", a proposal that could make sending money back home more expensive for three lakh Bangladeshis currently living in the United States.

The bill proposes a 5 percent tax on all international money transfers made by non-US citizens, including holders of non-immigrant visas such as the H-1B and green card holders.

During the January-March quarter of this year, Bangladesh received the highest amount of remittances from the US -- which was more than 18 percent of the total inflow.

"This is a matter of concern for Bangladesh. It would deal a massive blow to our increasing remittance inflow," said Birupaksha Paul, a professor of economics at the State University of New York in Cortland.

In the first nine months of the 2024–25 fiscal year, Bangladesh received $3.94 billion in remittances from the US, according to the Bangladesh Bank.

If enacted, the US law would deduct 5 percent from the transferred amount at the point of transfer. No minimum exemption has been proposed, meaning even small transfers would be taxed.

The measure could financially hurt around 300,000 Bangladeshis living in the US, according to 2023 estimates from the US Census Bureau.

Describing the proposed levy as "unfair", Paul said, "As people send remittance from their taxed income, it would be unfair to levy tax on remittance again."

He added that the bill might still pass due to the current political landscape in Washington.

"Most of the Congress members are fourth or fifth-generation migrants who no longer send remittances. And there is not much of a voice among economists here."

Paul said that the move comes at a time when the US is grappling with rising public debt and is looking for new revenue sources.

If the bill becomes law, India and several Latin American nations, which also receive large sums in remittances from the US, would feel a sharp impact.

For Bangladesh, Paul recommended allowing the exchange rate to be fully determined fully by the market, rather than offering remittance incentives.

"Better rates may attract remitters more effectively than cash incentives," he said.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, echoed similar concerns of Paul.

"If Bangladesh receives $1 billion in remittances from the US, a 5 percent tax would mean a $50 million loss," he said.

"As the US is our top remittance source, the impact would be significantly high," he added. "It would be a scary situation for the country's foreign exchange reserves."

Mohammad Abdur Razzaque, an economist and chairman of the Dhaka-based think tank Research and Policy Integration for Development (RAPID), said the proposed tax could push many back towards using illegal money transfer channels such as hundi, where rates are already more attractive.

"It will particularly affect small remitters," he said. "This is a policy challenge by a foreign country, but it will have serious domestic consequences."

"It is a matter of concern for us as the US is our largest remittance-contributing country."

Razzaque called for a united global response, pointing out that such a tax would undermine international efforts to reduce the cost of sending remittances.

"This is not just about Bangladesh. All affected countries should raise their voices collectively," he said.​

 

[Saif]

American imports getting cheaper under 500 products' duty cuts

Import taxes on nearly 500 products, including 100 from America, are up for cuts in the upcoming budget to smooth the path of Bangladesh's LDC graduation next year and offset Trump tariffs. Of the items, some 500 goods will see cuts ranging from 20 to 40 per cent in supplementary duty and regulato

thefinancialexpress.com.bd

Recast of tariff structures in budget

American imports getting cheaper under 500 products' duty cuts

WTO tariff compliance after Bangladesh's LDC graduation, aligning with Trump tariffs work

Doulot Akter Mala
Published :
May 30, 2025 00:38
Updated :
May 30, 2025 00:38

Import taxes on nearly 500 products, including 100 from America, are up for cuts in the upcoming budget to smooth the path of Bangladesh's LDC graduation next year and offset Trump tariffs.

Of the items, some 500 goods will see cuts ranging from 20 to 40 per cent in supplementary duty and regulatory duty (RD) while customs duty (CD) would be reduced on 135 items, official sources said.

The items include fish, animal-based items, less-commonly-traded goods, and certain intermediate raw materials.

"We are going to waive CD on 100 items imported from USA to align the tariff rate with reciprocity as desired by the Trump administration," says one revenue official.

To phase out protective tariffs -- meant for providing protection to fledging domestic industries -- import duty would be increased up to threefold on raw materials of 14 manufacturing sectors.

Those coming under the tax hike include beverages, energy-saving bulbs, water purifiers, fans, cigarette paper, and food processing.

Officials say the 'minimum value' system would be phased out for what is dubbed trade parity as it doesn't exist in any countries across the world.

However, as per lending conditions set by the International Monetary Fund (IMF) on mobilising more revenues, the government would increase the fixed value on 24 items for next fiscal year.

To comply with World Trade Organization (WTO) regulations also, tariff values and minimum values are set to be removed for around 40 types of products.

Import duties on raw materials for 59 types of medicines, including those used for cancer treatments, may be withdrawn entirely.

Minimum value refers to a fixed government-declared price below which no product can be assessed for duty, regardless of the declared import price.

This system helps prevent revenue evasion through under-invoicing. However, according to WTO standards, both tariff values and minimum values are inconsistent with global practices.

Bangladesh currently imports around 7,500 genres of products (tariff lines based on HS codes), most of which face very high import tariffs. Over 100 of these imports are subject to tariff-and minimum-value assessments, which have been widely criticized.

Officials have said upon Bangladesh graduating from LDC status, the country will have to move away from such tariff structures. Currently, local industries benefit significantly from tariff walls (high protection), which are not aligned with global standards.

According to the National Board of Revenue (NBR), the average import tariff in Bangladesh is 28 per cent -- more than double the average for LDCs.

Beverages, energy-saving bulbs, water-purifying machines, electric fans, cigarette paper, food processing may come under higher import duty.

Malt extract, food preparations of flour, grouts, meal, starch, or malt extract for infant or young children in bulk, imported by the food industry, nutritional supplements for the food industry for pregnant and breastfeeding women, soya-protein-based food preparations, raw materials for water-purifying machine, woven fabrics of man-made fibers for satin ribbon manufacturing, too, may see a hike in duty taxes.

For beverage concentrates -- CD might be increased from 10 per cent to 15 per cent while import for cigarette paper for tobacco industry may see 100-percent SD in a hike from the existing 60 per cent. The customs duty on non-alloyed aluminum rectangular plates, sheets, and strips for electric-fan manufacturing might be increased to 5.0 per cent from 1.0 per cent.

To promote the local leather industry, the government is likely to reduce customs duty on several chemicals under seven HS codes, including chromium, wattle extract, and tanning extracts of vegetable origin.

Sulphate-import customs duty will be down to 5.0 per cent from 10 per cent. However, VAT at 15 per cent will be applicable to this item.

Specific duty on import of refined sugar is likely to come down to Tk 4,000 from Tk 4,500, supplementary duty on microbus import will be halved from per cent.

The government is likely to facilitate local manufacturing of computers by adding some accessories to the list of pared-down import duties.

Customs duty on bus import is likely to be cut to half at 5.0 per cent from the current rate of 10.

To protect the local abrasive paper industry, the upcoming budget is likely to reduce customs duty on its two major raw materials- Phenolic resins and sandpaper coating materials -- to 5.0 per cent and 15 per cent from the current rates of 10 and 25, respectively.

Steel-industry raw material mould powder is currently facing 25-percent customs duty and a 3.0-percent regulatory duty. The upcoming budget is likely to reduce this to 15% and waive the regulatory duty.

To promote fruit export, the government is likely to reduce customs duty from 25 per cent to 5.0 per cent on fruit-bag imports.

Helicopter import is likely to face a hike in customs duty from 0% to 10%, and 15% VAT, 5% Advance Tax and 5% Advance Income Tax from the next fiscal year.​