Bangladesh Tariff Rate Analysis: Apparel, Vehicles, and Origin-Based Benefits
Bangladesh's Tariff System: The Structure of High Protective Duties
Bangladesh is one of the highest-tariff economies in South Asia. The average effective tax burden is around 27%, and the actual import cost is far higher than the headline customs duty because the system layers Customs Duty (CD), Regulatory Duty (RD), Supplementary Duty (SD), Value Added Tax (VAT at 15%), Advance Income Tax (AIT), and CESS.
For Korean companies exporting to Bangladesh or importing raw materials locally, an accurate understanding of this complex tariff structure is essential for price competitiveness and profitability. Duty exemptions for EPZ/SEZ firms, origin-based preferences, and duty drawback schemes need to be used strategically.
27%
Avg. Effective Rate
Across products
127%+
Peak Tariff
Vehicles and luxury goods
15%
VAT
Standard rate
0-25%
CD Bands
Four-tier CD system
Exempt
EPZ/SEZ
Full relief for export use
Available
Duty Drawback
For export inputs
89-127%
Vehicle Tariff
Total burden
Not concluded
Korea CEPA
No negotiations launched
How the Tariff Burden Is Imposed
Imports into Bangladesh are not charged only with customs duty. RD, SD, VAT, AIT, and CESS are added on top of CD, pushing the effective rate much higher. Understanding this layered structure is the starting point for accurate import cost calculations.
Bangladesh import tax structure
Tax Item
English Name
Rate
Tax Base
Remarks
Customs Duty
Customs Duty (CD)
0/5/10/25%
CIF value
Four bands
Regulatory Duty
Regulatory Duty (RD)
0-25%
CIF
Product-specific
Supplementary Duty
Supplementary Duty (SD)
0-500%
CIF+CD
Luxury goods and alcohol
Value Added Tax
VAT
15%
CIF+CD+SD
Standard rate
Advance Income Tax
Advance Income Tax (AIT)
3-5%
CIF
Income tax prepayment
CESS
CESS
0-5%
CIF
Selected items
Infrastructure Development Surcharge
IDSC
1-3%
CIF
Applies to some goods
Tariff Analysis by Product Group
Apparel and Textile Inputs
Raw CottonCD 0% + VAT exempt
YarnCD 5% + VAT 15%
FabricCD 10-25% + VAT
Finished GarmentsCD 25% + SD + VAT
Vehicles and Machinery
Passenger Car (up to 1600cc)Total 89%
Passenger Car (over 1600cc)Total 127%
Industrial MachineryCD 5-10%
Machinery for EPZ FirmsDuty exempt
01
Apparel and garment inputs
Inputs used in Bangladesh's garment sector, such as raw cotton, yarn, fabric, and accessories, generally face relatively low tariffs. Raw cotton carries CD 0%, while yarn is subject to CD 5%. Export-oriented firms located in EPZs or SEZs receive full exemption on imported inputs. Exporters outside those zones can still use bonded import schemes or duty drawback programs.
02
Vehicles and auto parts
Bangladesh's automotive tariffs are among the highest in the world. Fully built cars face stacked charges of CD 25% + SD 100-350% + VAT 15% + AIT 5%, resulting in a total burden of about 89% for vehicles up to 1600cc and 127% for larger cars. CKD/SKD imports are treated more favorably at CD 10-15%, which makes local assembly models structurally more competitive.
03
Electronics and home appliances
Finished-product imports typically face CD 25% plus VAT 15%, while components for local assembly are taxed at a lower CD 5-10%. This is a major reason Korea Electronics and Korea Display operate local assembly facilities. IT equipment for Hi-Tech Park tenants may be exempt from customs duty.
04
Food and agricultural products
Basic food items such as rice, wheat, and edible oil are generally taxed at low CD rates of 0-5%. Processed foods are much more heavily taxed, often at CD 25% plus VAT 15%. Korean food exporters therefore need item-level tariff checks based on the exact HS code.
05
Industrial machinery and equipment
Production machinery and equipment generally carry relatively low CD rates of 5-10%. Firms operating in EPZs or SEZs can import machinery duty-free, and machinery used for government infrastructure projects may also qualify for exemption.
Bangladesh's layered tariff system can raise import costs sharply, but it also contains multiple instruments for duty reduction, including EPZ/SEZ exemptions, bonded facilities, APTA preferences, and SRO-based exemptions. Korean firms need to design their tariff strategy according to business model, location, and market structure, especially when choosing between direct exports and local production. Because tariff schedules are often revised in the annual June budget, regular verification of the latest rates remains essential.
tariff ratesvehicle tariffsrules of origincustoms clearancetariff strategy