As Bangladesh prepares its 2026-27 budget, the jewellery sector is making a coordinated push to ease what it calls a “survival squeeze” on businesses, arguing that current taxes are out of sync with razor-thin margins and rising costs.
The Bangladesh Jewellery Association has proposed a sharp cut in the minimum turnover tax on gold sales from 1 per cent to 0.25 per cent, alongside scrapping the source tax and reducing import duties on diamonds. The proposals have been submitted to the National Board of Revenue ahead of the upcoming budget.
Margin pressure at the core
At the heart of BAJUS’s argument is a basic mismatch: the tax burden often exceeds actual profits. Jewellery trading, it says, is capital-intensive but yields fragmented returns. After expenses, net margins frequently fall below 1 per cent, effectively forcing businesses to dip into capital just to meet tax obligations.
This, the association warns, is pushing small and medium traders to the brink while inflating overall business costs.
Diamond duty cuts to spur a new industry
BAJUS is also pitching Bangladesh as a potential hub for diamond processing. It has called for lower duties on both rough and polished diamond imports, especially for licensed firms engaged in cutting and finishing.
With 100 per cent of the country’s diamond demand currently met through imports, the association sees an opportunity: reduce duties, encourage legal imports, and build a domestic value chain. A 40 per cent value addition requirement, it argues, could generate skilled jobs and reduce the outflow of foreign currency.
Source tax under fire
Another major concern is the 5 per cent tax deducted at source on total sales bills in the domestic market. BAJUS says this directly erodes working capital and discourages formal transactions. It has called for the complete withdrawal of this tax, along with the removal of VAT at source at the retail level.
Instead, the group proposes a simplified system, including a fixed VAT, Tk 2,000 per bhori of gold and per carat of diamond, to make compliance easier and reduce disputes with customers.
Rethinking import limits
The association has also flagged existing baggage rules as restrictive. Currently, passengers can bring in limited quantities of gold and silver duty-free, with caps on paid imports as well. According to BAJUS, these limits are creating an artificial shortage of raw materials and narrowing the importer base.
It has been suggested to temporarily restore earlier, more flexible provisions to stabilise supply.
Gold fair and tax amnesty proposal
In a more ambitious move, BAJUS has proposed organising a nationwide “Gold Fair” offering a one-time tax amnesty to legalise undeclared gold, diamonds, and silver.
The idea draws on past precedent. A similar initiative in 2019, following a government notification, saw strong participation and delivered significant revenue gains. Replicating that model, the association argues, could bring idle assets into the formal economy, widen the tax net, and curb smuggling and money laundering.
Industry seeks balance
BAJUS leaders say the goal is not tax avoidance but rationalisation. High duties and complex tax structures, they argue, are discouraging compliance and pushing parts of the trade into informal channels.
A more balanced regime, they believe, would not only stabilise businesses but also increase government revenue over time by expanding the formal base.
With budget discussions underway, the jewellery sector’s proposals add to growing pressure on policymakers to recalibrate tax policy in line with ground realities – where survival, not profit, is increasingly becoming the priority.