NBR may backtrack on plan to impose duty on MPs’ vehicles

Doc Summary

The National Board of Revenue (NBR) is likely to backtrack on its plan to impose a 25% customs duty and a 15% value-added tax (VAT) on the import of motor vehicles by lawmakers in the fiscal 2024-25.

Finance ministry officials with knowledge of the matter said the change in plan comes as the initiative contradicts the Members of Parliament (Remuneration and Allowances) Order, 1973 (President’s Order), which entitles lawmakers to a duty-free facility for vehicle imports.

This matter came to the fore after the Ministry of Law, Justice, and Parliamentary Affairs this week sent a letter to the NBR chairman, stating that the NBR’s customs wing cannot impose any duty on vehicles imported by MPs due to the existing order.

However, the NBR incorporated this plan with the approval of Prime Minister Sheikh Hasina during a meeting on 14 May regarding fiscal budgetary issues.

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Finance ministry officials explained that due to this legal issue, the proposal was not vetted by the law ministry, indicating that the duty-free car import facility will remain unchanged.

The president’s order reads, “A Member shall be entitled to import, free of customs duty, (value-added tax), development surcharge, and import permit fee, during the whole of his term of office, one (car, jeep, or microbus) of such specification, and on such conditions as the government may specify in this behalf.”

The order further specifies that “member” includes the prime minister, the speaker, ministers, the leader of the opposition, the deputy leader of the house, the deputy speaker, the chief whip, the deputy leader of the opposition, ministers of state, whips, and deputy ministers who are members of parliament.

The order also stipulates that a member is entitled to import another New car, jeep, or microbus after a period of five years from the date of their last import, under the same terms and conditions.

What do other citizens pay?

In the previous fiscal year, FY23, the government increased the supplementary duty on motor vehicles. The duty on imported cars with engine capacities ranging from 2,001cc to 3,000cc was raised from 200% to 250%, and for cars with engine capacities from 3,001cc to 4,000cc, it was increased from 350% to 500%.

Cars exceeding 4,000cc remained subject to a 500% duty rate, unchanged from before.

Additionally, in the current fiscal year, the NBR introduced an environmental surcharge, also known as a carbon tax, targeting owners of multiple cars.

Under this initiative, owners of cars with engine capacities up to 1,500cc or 75kW are required to pay Tk25,000 as an environmental surcharge. This surcharge doubles to Tk50,000 for cars with engine capacities ranging from 1,501cc to 2,000cc or between 75kW and 100kW.

For those who own a second car with an engine capacity of 2,001cc to 2,500cc or 101kW to 125kW, the surcharge increases to Tk75,000. Owners of multiple cars with capacities ranging from 2,501cc to 3,000cc or 125kW to 150kW face a surcharge of Tk1.5 lakh.

The highest surcharge of Tk2 lakh applies to cars with engine capacities exceeding 3,000cc, and for those with capacities of 3,500cc or 175kW and above, the surcharge is Tk3.5 lakh.

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NBR / MP vehicles / tax / Bangladesh

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