The budget for FY27 has proposed a 25% customs duty and 5% regulatory duty on filled milk powder (FMP), much higher rates than duties on similar other milk powders.
The proposed budget has rather reduced customs duty on bulk infant formula to 10%, a measure that has been aimed at making baby food more affordable.
Despite having an 88% household penetration rate across the country, FMP faces a 64.25% tax incidence inclusive of customs duty and other forms of taxes. This is the highest rate among all the milk powder categories in Bangladesh.
Trade stakeholders call this a structural discrepancy, suggesting that the tax structure could be harmonized and a level-playing field would be created if FMP is placed under a matching 10% customs duty.
A more affordable option for lower-income families, FMP offers protein and calcium levels nearly identical to premium whole milk powder, standard laboratory data indicate.
The current fiscal policy categorizes FMP alongside sweetened condensed milk, which contains approximately 47% refined sugar and lower protein content.
While a higher tax slab is imposed on condensed milk due to its high sugar content, nutrient-dense FMP belongs to the category of standard milk powders that is subject to lower taxes as they optimize nutritional outcomes.
Filled milk powder is said to be a critical vehicle for fulfilling the daily protein and micronutrient requirements of growing children and adolescents, not any luxury or a confectionery item.
A meeting between the Ministry of Commerce and an EU delegation in April agreed upon harmonizing milk powder tariffs to boost bilateral trade.
"European enterprises are committed to meeting Bangladesh's nutritional demands with safe, affordable dairy. Harmonizing duties on filled milk powder will eliminate non-compliant competition, secure state revenue, and unlock vital FDI (foreign direct investment) from European businesses to develop the dairy sector,” said Nuria Lopez, chairperson of the European Chamber of Commerce (EuroCham) Bangladesh.
“We also strongly appreciate the government's direction toward bringing all milk categories under a similar tax slab, making milk an accessible form of nutrition to support the SDG health agenda," she added.
Countries like Sri Lanka, Pakistan, Vietnam, and Cambodia maintain FMP in the same tax slab as whole milk powder.
Stakeholders believe that bringing uniformity to tariff structure would create a level-playing field in revenue collections and also positively guide future investment plans.
