NBR exempts EPZ factories from 25pc tobacco export tax

The National Board of Revenue (NBR) has waived 25 per cent tax on export of tobacco products by factories located in the country's Export Processing Zones (EPZs).

The customs wing has issued a Statutory Regulatory Order (SRO) dated August 27, 2017 in this regard. The exemption takes retrospective effect from July 1 this year.

Currently, only US-based Pace Tobacco Industries (BD) Limited is producing and exporting tobacco products from the Mongla Export Processing Zone.

After two months of increasing the tax to 25 per cent, the NBR waived it for the EPZ factories on export of cigars, cheroots, cigarillos, containing tobacco, cigarettes containing tobacco, water pipe tobacco, homogenised and reconstituted tobacco and other types of tobacco.

In the budget for Fiscal Year (FY) 2017-18, the government increased the export duty on tobacco items to 25 per cent from 10 per cent, aimed at discouraging production of the health hazardous items.

Export tax on the tobacco items remains 25 per cent for other companies outside the EPZs.

Talking to the FE, ABM Zubair, executive director of Progga, an anti-tobacco advocacy organisation, said the supply chain has to be checked for reducing tobacco consumption.

The decision went against the public interest and public health, he said.

"Bangladesh is considered as potential export hub of tobacco leaves as developed countries have stopped its production," he added.

According to Export Promotion Bureau (EPB), export of tobacco leaves marked seven times increase since FY 2005-06.

In FY 2005-06, export volume of tobacco items was US$ 7.0 million, which rose to $ 47 million in the first seven months of FY 2013-14.

Currently, tobacco is cultivated in some 1,80,000 hectors of land involving nearly 2,50,000 farmers in Bangladesh. Bangladesh started exporting tobacco in 2004.

Germany, Belgium, Hungary, Sweden, Indonesia, Malaysia, Pakistan and Singapore are the main importers of Bangladeshi tobacco leaves.

NBR officials said the tax has been waived as there is no export tax on EPZ factories. The NBR followed the act and waived export duty, they said.

According to law of the Bangladesh Export Processing Zones Authority (BEPZA), export of all items from EPZ factories is tax free.

In line with the government's target to make the country tobacco free by 2040, the government in FY 2010-11 imposed export tax on tobacco to discourage production due to its harmful impact on health.

Source: the financial express, 8 September 2017