The National Board of Revenue (NBR) is planning to increase the amount of tax payable for gold brought in under baggage rules in order to encourage legal import of gold and use of legal channels for remittance transfers. 

Sources in the NBR believe most of the gold being brought into the country in this manner were an intentional attempt at bypassing higher import taxes and at smuggling the gold to neighbouring countries.

Moreover, it was part of the hundi process, a cross-border money transfer method that bypasses the legal banking system.

Under the upcoming Baggage Rule-2023, a passenger will have to pay Tk 40,000 in tax for each gold bar (weighing approximately 116 grams), which is double that currently payable.

Under the existing law, a passenger can bring two gold bars (up to 234 grams). Anything extra is acceptable through the payment of a fine. The new rule would enable confiscation of anything extra or undeclared.

This change, to be proposed in the upcoming budget, is being made based on the recommendations of the Customs Intelligence and Investigation Directorate (CIID) and customs officials concerned.

"Intelligence agencies found evidence that gangs are smuggling gold to neighbouring countriesusing the facility," a top NBR official told The Daily Star on condition of anonymity

"As a result, this law is to be implemented as soon as possible from next June-July," said the official.

The sources said all concerned, including the prime minister and finance minister, have provided policy support.

An NBR source said about 99,791 kilogrammes of gold bars worth Tk 87,500 crore were brought into the country through luggage in the last four years till 2022.

However, about 52 per cent, or at least 52,195 kg worth Tk 44,366 crore, was brought in 2022 alone.

The amount is also equal to three to four years' demand of the country, said the sources.

The government received about Tk 1,714 crore in duties from the gold in the last four years.

In 2018, the NBR allowed 18 companies to import gold but up until now only three have imported a nominal amount.

"Individuals bringing gold into the country under the baggage rules have to pay less in taxes than the ones importing gold for business," Mohammad Fakhrul Alam, director general of the CIID told The Daily Star.

"The smugglers are taking advantage of this facility…this is impacting our remittance inflow," he said.

"We sent some suggestions to the NBR to change the baggage rules. Besides, I have heard that some suggestions have been forwarded from other organisations and agencies. However, I still don't know what changes will be made, he added.

"The cost of importing gold is almost double that under the baggage rules. As a result, smugglers are using baggage rules to bring in gold," said Anwar Hossain, vice president of Bangladesh Jewellers' Association, told The Daily Star.

"Gold bars and jewellery worth around Tk 73,000 crore come to Bangladesh under baggage rules every year and most of this gold goes to neighbouring countries," he said.

"The money of the gold was supposed to be remitted by migrants but it arrives in the form of gold," he added.