A temporary tax break that made imported smartphones cheaper for Bangladeshi consumers is nearing its end, raising concerns that handset prices could jump sharply from July and drive more buyers toward the country’s growing grey market.
The uncertainty centres on a January gazette notification that cut customs duty on imported smartphones to 10 per cent from 25 per cent until 30 June, a move aimed at making digital devices more affordable as smartphones become increasingly essential for education, banking, work and communication.
The concession reduced the overall tax burden on imported handsets to about 43.43 per cent from roughly 62 per cent previously. Industry projections suggest the tax load could rise to nearly 64-65 per cent after the concession expires, particularly if regulatory duty increases to 5 per cent from 3 per cent.
Such a reversal could leave Bangladesh with one of the region’s highest tax regimes for mobile phones. Industry stakeholders warn the move could increase prices while weakening formal imports and, ultimately, government revenue collection.
Under the temporary duty structure, imported smartphones priced above Tk30,000 became cheaper by about Tk5,500, helping expand access to digital services during a period of pressure on household budgets.
The prospect of higher taxes has alarmed importers and distributors, who argue that the market could face a familiar cycle of rising prices, shrinking official imports and expanding unofficial trade.
Xiaomi Bangladesh Country Director Ziauddin Chowdhury said smartphone prices could rise by around 20 per cent if the higher tax structure returns, with the impact concentrated in mid-range and premium devices.
He said most smartphones above Tk30,000 are not commercially viable for local manufacturing, leaving imports as the primary source of supply.
“When duties become excessively high, official import volumes decline because commercial viability weakens,” he said. “Demand does not disappear. It simply shifts to unofficial channels.”
Industry observers say a significant portion of premium handsets from global brands including Apple, Google, Samsung, Xiaomi, Motorola and Huawei already enters Bangladesh through informal or semi-formal channels. Market participants say a wider price gap between official and unofficial imports would likely accelerate that trend.
DX Group CEO Dewan Kanon said the January concession had temporarily eased pressure on consumers but warned that the benefit could disappear within weeks.
If duties return to earlier levels, smartphones would become significantly more expensive, particularly for students and middle-income consumers who increasingly rely on mobile devices to access educational content, financial services and digital platforms, he said.
The concerns extend beyond retail pricing.
Industry executives warn that reduced commercial incentives for formal imports could narrow the range of models available through authorised distributors, limiting consumer choice and weakening after-sales service networks. A larger grey market would also make tax enforcement more difficult and reduce transparency in pricing.
The debate comes as the government seeks to raise about Tk6 lakh crore in revenue in fiscal year 2026-27, with import duties contributing a significant share of collections.
Economists and industry participants argue that higher tax rates do not necessarily translate into higher revenue. While collections per imported unit may rise, the overall tax base can shrink if official import volumes fall and more trade shifts outside formal channels.
The issue highlights the challenge of balancing revenue collection with digital adoption.
Smartphones have become the primary gateway to mobile banking, freelancing, e-commerce, online learning and government services for millions of people. A sharp increase in handset prices could slow digital adoption and widen affordability gaps, particularly among younger users and lower-income groups that depend heavily on mobile connectivity.
The government’s decision on post-June smartphone taxation will therefore be closely watched by businesses and consumers alike, with implications extending beyond handset prices to revenue collection, digital inclusion and the future trajectory of Bangladesh’s digital economy.
