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If you are driving car in Bangladesh you have been well aware of the heavy taxes that are imposed to own a vehicle. If you are intending to purchase a car, then it becomes necessary that you learn about these taxes, and whether you would be expected to part with some amount of money toward them. The first thing that needs to be done is to understand about what types of taxes are available and if one qualifies. The government of Bangladesh has set it mandatory for every citizen who fits into a certain criterion to pay his or her taxes. However, there are several individuals, who do not have to pay taxes by certain rules that bar them. How, therefore, does the government distinguish who needs to pay? This is where the Electronic Tax Identification Number (e-TIN) comes in since it is the use of an identification number that is in line with the principles of e-governance. The e-TIN is a tax payer identification number as a unique piece of identification number recognized by the tax regulating body which consists of 12 digits. Any Bangladeshi citizen above or equal to 18 years of age, who is a receiver of a taxable income is eligible to apply for an e-TIN. Applying through such services as Adviser Bangladesh, you will be able to get your e-TIN certificate within a short time. For other general information about the filing of tax returns, kindly click on our previous post regarding that topic.

Types of Car Tax in Bangladesh:

For eligible vehicles in Bangladesh, there are several other forms of taxes which need to be paid and the cost of each can be considerably different. It is not a blind and progressive tax because people get paid differently, possess dissimilar skills, and their assets are not the same, thus this call for the application of differential taxes. To make it easier for you, we have explained the different types of tax and their payment standard for car taxes in Bangladesh below.

Custom Taxes:

Generally, car and any vehicle has a Customs Tax based on certain parameters or criteria that is paid for. In Bangladesh, the Customs Department is the authorized body to check imported and exported goods. They also have the exclusive right to assess customs duties; which are predetermined rates on some goods. These tariffs are controlled by the customs officers who after following some procedures can alter the amounts. The volume of tax gets adjusted, based on the price, the country of manufacture, size, or weight of the vehicle.

income tax:

The income tax is primarily computed employing personal income and owned properties instead of a fixed percentage on individual products that are produced. You have to know that as explained before you are required to make an income tax payment only in specific conditions. Also, one’s car or an equivalent extends one’s list of owned assets and therefore, the taxable property. The enhanced value from this car is determined by the category of the car you have as follows; As explained in the SD section on luxury cars are more valuable—and thus taxes should be higher—in Bangladesh than on standard cars.

Your current value on your car, as estimated for tax, raises your overall total of estimated annual tax. As per the new Environmental Protection Surcharge which will be enforced in the fiscal year 2024, the taxes will be imposed on persons owning a number of cars. This new law has to force the owners of a single car with the engine capacity of up to 1500 cc to pay a surcharge of Tk 25,000. However, if one happens to own more than one car with engine capacity not exceeding 2500cc, he or she will need to pay Tk 75,000. Moreover, if an individual have a second or third car over 3000cc, then the surcharge will be Tk 200,000 more. Finally, the car lovers who own cars having engine capacity above 3500cc using imported cars will have to pay an additional amount of tk 350000.

Corporate tax:

Corporate tax also as with the individual income tax, is computed based on the profits and the assets of the company. The tax is computed by the cumulative percentage of the taxes related to the number of automobiles that the corporation possesses. So, it is worth making a second that corporations are to be charged under the New Environmental Protection Surcharge. Thus, a corporation can even pay an amount up to an astonishing Tk 350 000 for car with an engine capacity more than 3500cc.

Value-Added Tax (VAT):

VAT is another tax imposed on products and goods which are listed by the government. Currently, in Bangladesh, the standard rate of VAT is 15% and may higher or lower based on the quantity and origin of a product. In case of the purchase of a car from a local vendor, the buyer pays for the VAT then the seller passes it to the government.

Supplementary Duty (SD):

Supplementary Duty is a kind of tax that is levied on luxury as well as imported goods and covers all kinds of automobiles. This is in accordance the Supplementary Duty Act of 2012 in which the rates may be up to 45% of the purchase value. For vehicles, SD rates vary based on engine capacity, For vehicles, SD rates vary based on engine capacity:

 1500cc car tax in Bangladesh  and above: Tk 25000

 2001 cc car tax in Bangladesh to 3000cc: What is more, insurance companies may assess up to 200 percent of the value of the car in question.

  3001cc car tax in Bangladesh to 4000cc: Three hundred percent of the value of the vehicle.

  Above 4000cc or around 4500cc: 350 percent of the value of the vehicle.

This is important to note that the government has budgeted for the fiscal year 2023-2024 which could likely feature an uplift in car taxes.

Why is Car Tax in Bangladesh Increasing?

The taxation on products and valuable items is carried out by the National Board of Revenue (NBR) in Bangladesh. Any product that is imported or any shipment that is received from another country attracts extra charges for customs. There are many specified and unspecified fees which is charged on various goods if the seller is outside Bangladesh. This is due to the fact that payments made for goods to foreign sellers lead to capital flight and therefore impede growth of the national economy. 

Spending money, therefore, most often means spending money abroad has a detrimental effect on the country’s value. That is why Bangladesh like many other countries places certain conditions on the import of such high-value goods. Since there are no automotive manufacturers in Bangladesh, most of the cars use in Bangladesh are imported. Therefore, buying a car is not a simple process and the taxes which are attached to it can be as high as 200% of the price of the car.  Owing to the growing concern of traffic jam, the authorities are now implementing exercises to limit people from using their cars frequently. On the list of such activities is the Environmental Protection Surcharge that is targeted at reducing the use of cars. To reduce traffic congestion and pollution the government of UK introduced new conditions to own more than one car and has raised car tax yearly. Even though these steps have implications that can be positive, owning a car has become more difficult for middle-income earners because of the rising cost of car taxes in Bangladesh. Learn more and guides Solution Taxation Services