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Bangladesh Looking to Raise Taxes on Imported Mobile Phones

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Bangladesh's government plans to raise the import tax on mobile phones by a third from 10 percent to 15 percent.

The move is said to be aimed at supporting the assembly of mobile phones locally, but at the moment, there is thought to be no significant assembly plants in the country.

Handset importers worry that the new tax will do less to support the setting up of local factories than to encourage the smuggling of mobile phones to avoid the tax entirely.

There is a sweet-spot where a tax can be applied at a level that raises money, without making it worth the hassle of avoiding through smuggling. Raising the tax makes smuggling look more economically viable as the added costs and risks are lower than the tax that would otherwise be paid.

The country imports around 25 million mobile phones each year.

There are also concerns raised that consumers may put off buying phones if the cost rises, and that would affect the wider economy and slow the desired increase in mobile services and internet access amongst the population.

The government is however planning to retain the tax on new SIM Cards, but will reduce it for replacement SIM cards.

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Tags: Bangladesh