Samsung has halted local assembly of one lakh pieces of 4G enabled smartphones because of the sudden 15 per cent hike in VAT in the proposed budget.

The imposition has put a stop to the 'Made in Bangladesh' Samsung phones, said Ruhul Alam Al-Mahbub Manik, chairman of Fair Group, the local business that established the assembly plant of Samsung in Narsingdi.

The new tax structure will increase the cost of production and might even lead to plants shuttering down, he said. "How would the mobile assembly plant owners survive if the import tariff is lower than that of local manufacturing?"

According to Manik, Samsung has stashed equipment worth to assemble about one lakh pieces of smartphones at its Narsingdi factory, the assembly of which has been put to hold.

"We will have no other way then to shut down our plants," said Manik, also the president of Bangladesh Mobile Phone Importers Association.

On 7 June, the NBR issued a statutory regulatory order listing 10 conditions. If any assembler fails to meet those, a 15 percent VAT will be imposed on the phones produced by the company. Also, the tax for local manufacturer will be 13 percent if they can follow the 10 conditions.

The VAT will be around 34.2 per cent if the 15 percent new tax is added with 18.8 percent VAT the local assemblers used to pay. The import tariff for mobile handsets is 31.1 percent now.

Manik said along with them seven other established assembling plants and invested few hundred crore taka that will gone to vain if the new tax structure will not revised.