Call for reconsideration of proposed budget tax changes on shipbreaking industry.
Bangladesh Shipbreakers and Recyclers Association (BSBRA) has expressed deep concern over the various tax and duty changes imposed on the shipbreaking industry in the proposed national budget for the fiscal year 2025-26. The association believes that these changes are unreasonable in the current global and local industry situation and will weaken the ship recycling industry of Bangladesh in terms of regional competitiveness. The association calls on the government to emphasize the following issues in light of the proposed tax:
First: Increase in duty on ship imports: LDT-based customs duty has been increased from Tk 1500/- to Tk 1800/- for ships imported under the “Vessel and other floating structure for breaking up” category under H.S Code 8908.00.00. The association claims that this will create additional pressure on the industry.
Second: Increase in duty on ship plates: The duty on plates under H.S Code 72.04 will increase from Rs. 1000/- to Rs. 1200/-, which will increase the cost of the industry by Rs. 200/- per plate, which will increase the cost of the industry.
Third: Double taxation on parts and fittings: After the import of the ship, the parts, machinery and outfitting are being re-taxed at the time of separate use or sale, which is considered as double taxation. Since these are mainly imported as part of the ship and are considered under LDT, additional tax on these is not necessary in any way.
Fourth: High tax on Lube Oil in Tank: The proposed 45% tax on Lube Oil in Tank existing in the ship is creating an additional cost of about Rs. 1.48 lakh to the industry. Since this Lube OiL has no selling value, tax on it is not justified.
Fear of reduced competition and industrial stagnation: The above changes will put undue pressure on the industry and weaken Bangladesh’s competitiveness in the regional and global markets. In accordance with the relevant law of the country ‘Ship Recycling Act 2019’ and the international law Hong Kong Convention, each ship recycling yard is currently investing Tk 50 to 100 crore to transform into a green industry. If the additional tax burden continues to be lifted instead of patronizing this industry at this tangential time, the investment risk in this industry will increase further.
Taking the overall consideration, BSBRA’s recommendations:
Re-fixing the LDT based on the pre-tax rate at Tk 1500/-.
Returning the duty on plates under H.S Code 72.04 to the previous Tk 1000/-.
Double taxation on parts, fittings and outfitting materials to be stopped.
Withdrawal of unreasonable duties and taxes on Lube Oil in Tank.
BSBRA urges the concerned authorities to reconsider the proposed tax structure taking into account these recommendations, so that the country’s important shipbreaking industry can survive and move forward sustainably.
