According to internal sources within the National Board of Revenue (NBR), the underlying philosophy of the upcoming tax policy is "production over imports."
The strategy aims to reduce pressure on foreign exchange reserves by discouraging non-essential imports, while simultaneously helping local industries survive international competition.
To achieve this, the state has finalized plans to increase customs tariffs, value-added taxes (VAT), and supplementary duties on specific foreign goods.
To drive self-reliance in the domestic agricultural and fisheries sectors, the government is building tariff walls to shield local farmers from uneven foreign competition:
- Local Cashew Market: Commercial cultivation and processing of cashew nuts have expanded rapidly across the country's hilly regions. To protect this emerging local industry, the government proposes to raise the import duty on foreign cashew nuts from 5% to an aggressive 25%, which will likely push foreign cashews out of reach for average retail consumers.
- Frozen and Premium Fish: To guarantee fair market access for local fish farmers, taxes on imported seafood are going up. Specifically, a new 20% supplementary duty will be slapped on imported Pangasius fillets. Concurrently, a 15% VAT is slated to be placed on high-value frozen fish imports, making premium foreign and marine fish considerably more expensive.
- Cigarettes and Nicotine Inputs: The budget introduces price hikes for cigarettes, raising retail costs by Tk5 to Tk7 per pack to discourage smoking. To target production chains directly, the state is introducing a 300% supplementary duty on imported cigarette filter paper and an unprecedented 350% supplementary duty on imported nicotine. Additionally, a 40% supplementary duty will be applied to nicotine pouches, which have seen a surge in popularity among urban youth.
- Domestic and Foreign Spirits: To preserve foreign currency, the high tariff rates on foreign spirits will be raised further. To bring domestic production under uniform tax guidelines, the government also intends to apply a fixed, per-liter VAT on spirits produced by the state-owned Carew & Co. (Customs and Excise Distillery). Consequently, both local and imported alcohol prices will climb.
Construction
The new tax structure is expected to create supply-side friction for the real estate and infrastructure sectors.
The government plans to increase the combined tax and VAT rate on mild steel (MS) rods—a foundational construction material—by implementing a new specific tax structure at the production phase.
Lenders and industry insiders warn that this combined adjustment will lead to an estimated 10% increase in effective taxes per ton of rod, driving up costs for personal homebuilders and public infrastructure projects alike.
Premium cosmetics, packaged foods face price surges
The upcoming tariff adjustments are set to increase daily living costs for upper- and middle-class urban consumers accustomed to premium global brands:
- Luxury Cosmetics: To give domestic cosmetics and toiletries brands more room to scale, higher taxes are being placed on foreign beauty products. Increased VAT and supplementary duties at the import stage will drive up retail prices for high-end skincare products, imported makeup, and premium perfumes.
- Imported Processed Foods: Premium, import-reliant foodstuffs—such as foreign packaged chocolates, wafers, potato chips, premium biscuits, and processed juices—will face higher supplementary taxes, requiring consumers to pay a premium for imported labels.
Other products
- Imported Cashew Nuts (Customs duty surging from 5% to 25%)
- Imported Pangasius Fillets (Subject to a new 20% supplementary duty)
- Premium Frozen Fish (Subject to a new 15% VAT framework)
- Cigarettes and Tobacco Products (Retail prices up by Tk 5 to Tk 7 per pack)
- Cigarette Filter Paper (Subject to a new 300% supplementary duty)
- Imported Industrial Nicotine (Subject to a new 350% supplementary duty)
- Nicotine Pouches (Subject to a new 40% supplementary duty)
- Local and Foreign Alcohol (New per-liter VAT on Carew & Co. products; increased customs tariffs on foreign labels)
- MS Rods and Structural Steel (Production-phase adjustments driving an estimated 10% tax increase)
- Foreign Brand Cosmetics & Skincare (Higher import-stage VAT and supplementary duties)
- Imported Packaged Foodstuffs (Increased duties on foreign chocolates, chips, biscuits, and juices)
According to Ministry of Finance officials, the primary goal of these selective tax hikes is not merely to boost short-term revenue collection, but to stimulate domestic production capabilities during a period of foreign exchange volatility.
