Case 21: Overview of Sunghwa Moolsan's Customized Tariff Response Package
Sunghwa Moolsan, a Korean exporting company, commissioned KOTRA Dhaka Trade Office to design a customized tariff response package aimed at optimizing tariff costs in exports to Bangladesh. Bangladesh operates a complex tariff regime with multiple layers, including customs duty, supplementary duty (SD), advance tax (AT), and regulatory duty (RD). Since tariff rates vary significantly by HS code and no Korea-Bangladesh FTA is in force, building the right tariff strategy is central to export competitiveness.
Analysis of Bangladesh's Tariff Structure
Bangladesh's import tariff system consists of six layers: customs duty (CD), supplementary duty (SD), advance tax (AT), value-added tax (VAT), regulatory duty (RD), and infrastructure development surcharge (IDSC). Because these charges are applied in combination, the effective tariff burden can easily reach two to three times the base customs duty. Precise HS code classification therefore matters, as even subcategory-level differences can materially change the final landed cost.
| Tariff Type | Rate Range | Coverage | Key Characteristics | Savings Potential |
|---|---|---|---|---|
| Customs Duty (CD) | 0-25% | All imports | Four-tier structure (0/5/10/25%) | HS code optimization |
| Supplementary Duty (SD) | 0-45% | Luxury and protected items | Used to protect domestic industry | Product classification review |
| Advance Tax (AT) | 3-5% | Most imports | Functions as VAT prepayment | Limited |
| Value-Added Tax (VAT) | 15% | Most imports | Standard rate | Check exempt items |
| Regulatory Duty (RD) | 0-5% | Selected items | Changes periodically | Review latest notices |
| Infrastructure Surcharge (IDSC) | 1% | Most imports | Supports infrastructure finance | Fixed |