A passenger can bring 20 bhoris of gold bars from abroad without paying VAT
Jewellers have demanded that the right of passengers to carry gold bars from abroad be scrapped to safeguard their interests.
A passenger can bring 20 bhoris (234 grams) of gold bars from abroad without paying value added tax (VAT), under baggage rules. The government has given the facility for personal use of the precious metal.
Jewellers of the country also sought withdrawal of VAT on gold import.
The Bangladesh Jewellers Samity recently sent a letter to the National Board of Revenue (NBR), seeking measures to fulfil the two demands, although the government had previously formulated a new gold policy after discussing with gold traders.
The government provided jewellers with gold import licences to facilitate growth of the domestic jewellery industry.
Under the Gold Import Policy 2018, an import tax of maximum Tk1,000 per bhori has been imposed on marketing and selling of gold. But 15 percent in VAT and 5 percent in advanced income tax have been slapped on gold imports from the current fiscal year.
On the other hand, a passenger can bring 20 bhoris (234 grams) of gold bars upon payment of Tk2,000 per bhori in tariff, whereas gold businesses need to pay an additional 20 percent in taxes alongside the existing tariff to import the same amount of bullion.
Additionally, a passenger can also bring 100 grams of gold ornaments without paying any duty or tax.
As a result, importers need to spend additional Tk12,000-Tk14,000 per bhori – much higher than any of the neighbouring countries.
Businesses will lose interest in importing gold if the VAT is not reduced, the jewellers association said.
Considering the situation, jewellers came up with the damnds for withdrawing VAT and banning passengers from bringing gold bars into the country.
"When the policy was introduced, there was no mentioning of the VAT and advance tax. They have been added in the new VAT law," said Ganga Charan Malakar, former chairman of the Bangladesh Jewellers Samity and coordinator of the Gold Import Policy.
"If general passengers can bring 20 bhoris of gold without VAT, they can save at least Tk2 lakh. Jewellers will not be able to survive in this situation. This needs to be sorted out," he added.
When asked about the demands of gold traders, Golam Kibria, member of NBR VAT Policy, said, "The demands are yet to reach us. Upon receiving their proposal, we will discuss with all associated parties and reach a decision."
Sources said 15,000 small and medium jewellers are involved in the Bangladeshi gold market.
The country's annual approximate demand for gold is between 20 and 40 tonnes – most of which is met by smuggled gold, depriving the government of a huge amount of revenues.
Considering all aspects, the government introduced the Gold Import Policy in 2018. Later, 18 institutions, including a bank, were granted dealership licences to import gold for two years.
But the central bank's permission is required in the different phases of import.
The organisations, who have acquired licences, are Madhumati Bank, Diamond World, Jewellery House, Ratna Gold, Arosa Gold Corporation, Amin Jewellers, Jarwa House, Sreja Gold Palace, Milon Bazar, SQ Trading, MK International, Borak Commodities Exchange, Golden World Jewellers, Ria Jewelers, Lakkhi Jewelers, Bidex Gold and Diamond, D'damas and The Art of Gallery.
Although no gold has been imported under the new law, jewellers nonetheless have increased gold prices. The prices have been raised in line with the international market, according to the traders.
The finest quality or 22-carat gold is now selling at Tk60,361 per bhori, 21-carat at Tk58,028 per bhori and 18-carat at Tk53,013 per bhori.