Cement manufacturers seek lower clinker duty, tax relief in FY27 budget

The Bangladesh Cement Manufacturers Association (BCMA) has urged the government to revise several tax and duty measures proposed in the FY2026-27 budget, warning that the current structure would increase production costs and create cash flow pressures for cement manufacturers.

In a letter sent to the secretary of the Internal Resources Division and chairman of the National Board of Revenue (NBR) on yesterday (28 June), BCMA President Mohammad Amirul Haque proposed reducing customs duty on clinker, lowering advance income tax (AIT), withdrawing supplementary duty on limestone and revising customs valuation of key raw materials.

The association said clinker, the principal raw material for cement production, currently attracts a 15% customs duty on its assessable value, which it described as excessively high compared with the duty structure for raw materials used in other industries.

It noted that in FY2024-25, customs duty on clinker was Tk700 per tonne and proposed reducing it to Tk500 per tonne from FY2026-27. BCMA welcomed the government's decision to make advance income tax refundable and adjustable, with provisions for carrying forward unadjusted amounts.

However, it said the proposed AIT rates of 2%-4% on imported raw materials, along with a 2% AIT at the sales stage, would put significant pressure on manufacturers' cash flow.

The association recommended capping AIT at 0.5% at both the import and sales stages.

The industry body also alleged that customs authorities assess duties on cement raw materials using values significantly higher than their actual import prices.

According to BCMA, clinker imported at $48-$50 per tonne is assessed at $52.5 per tonne, while granulated slag imported at $15.5-$25.9 per tonne is assessed at $30 per tonne.

Similarly, limestone imported at $15.5-$16.5 per tonne is assessed at $20.5 per tonne, fly ash imported at $22.9-$24 per tonne is assessed at $30 per tonne, and gypsum imported at $22.1-$32 per tonne is assessed at $35 per tonne.

The association urged the NBR to assess customs duties based on invoice values rather than fixed assessable values.

BCMA also called for the withdrawal of the existing 10% supplementary duty on limestone, arguing that such duties are generally imposed on luxury or discouraged imports rather than essential industrial raw materials.

The association noted that a similar duty imposed in 2022 had been withdrawn in 2023 following industry objections but was reintroduced in January 2025.

The association further proposed introducing a tariff-based VAT system under which all cement manufacturers would pay VAT at a uniform rate per tonne instead of on varying product values. It argued that such a system would reduce disputes over VAT assessment and could increase overall VAT collection, citing the steel rebar sector, where a tariff-based VAT system is already in place.

BCMA said it was ready to provide further information or technical explanations to the NBR regarding its recommendations if required.