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Domestic fridge, AC makers given a fillip

NBR waives VAT, duty on import of raw materials for compressors

Sohel Parvez
The revenue authority has waived value-added tax and supplementary duty on the import of raw materials to make compressors of refrigerator and air conditioners with a view to facilitating local manufacturing.
The VAT exemptions on production of compressors, refrigerators and AC have been awarded until June 30,2021, according to two notifications issued by the National Board of Revenue on Sunday.
The revenue authority took the decision more than one year after it had waived VAT and SD on import of raw materials and components of refrigerator and air conditioners on July 1,2017.
The benefit, where compressors of both the appliances were not included at that time, was set to expire on June 30, 2019.
Now, domestic manufacturers of refrigerators, AC and compressors will get two years more to import components of these appliances without paying VAT and SD.
"We have given the opportunity to manufacturers to encourage industrial develop-
ment," said Md Rezaul Hasan, member of NBR's VAT policy department.
VAT and SD exemption benefit has been extended for the import of components of compressors of refrigerators and AC following applications from manufacturers.
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However, the NBR has given a list of machines to make compressors of refrigerator and AC and said the manufacturer will need to have the machines in the compressor factory to avail the opportunity of VAT and SD waiver.
The revenue administration's move comes as a number of domestic companies and foreign brands have started assembling and making components of refrigerators and ACs to cater to the soaring demand for the appliances thanks to rising income, increased electricity production and expanded electricity network.
More than half a dozen companies such as Walton, Marcel, Jamuna and Minister make components of refrigerators and AC that are mainly sold in the local market.
Two global electronics giants Samsung and LG have also entered the market and teamed up with Transcom Group and Fair Electronics as well as Butterfly respectively to make televisions, refrigerators and air conditioners.
Compressor is a vital component of refrigerator and AC and withdrawal of VAT and SD would reduce the cost of manufacturers, said Md Sahabuddin, secretary general of the Bangladesh Refrigerator Manufacturers and Exporters Association.
Currently only Walton makes compressors. "The import of compressors will also decline as these will be made locally," he said, adding that Bangladesh required nearly 3 million compressors annually to make new refrigerators and repair the old ones.
There is a possibility of a decline in refrigerator prices following the NBR move.
'But it can be definitively said that there will be an improvement in quality and refrigerators will become affordable.’
The production cost of AC will also decline because ofVAT and SD waiver.
'In future, AC will no longer be a luxury product as it is dubbed today."
Bangladesh has an annual market of about three lakh units of air conditioners and the market is growing at more than 15 percent, according to Sahabuddin.