Bangladesh Cuts Import Tax on Green Chillies and Tomatoes to 20.5%

TBS Report, Dhaka — The government has cut import tax on green chillies and tomatoes from 61% to 20.50% following a sharp rise in their prices — with green chilli prices crossing Tk 400 per kilogramme in some markets in August 2026, prompting emergency fiscal intervention to increase supply.

The Internal Resources Division (IRD) of the Ministry of Finance issued the order on 30 August 2026 and published it on the government website on 31 August. Officials of the National Board of Revenue (NBR) were primarily involved in preparing the order.

💰 Tax Rate Structure

• 💰 Previous rate: 61%
• 💰 Month 1 (September): 20.50%
• 💰 Month 2 (October): 30%
• 💰 After 60 days: returns to 60%
• 📊 Maximum reduction: 40.5 percentage points (from 61% to 20.5%)

📊 Price Surge Context

• 🍁 Green chilli price surge: crossed Tk 400 per kg in some markets
• 🍁 Price timeline: began rising in July, peaked in August
• 🍁 Previous price range: Tk 180-220 per kg (a week before the surge)
• 🍁 Peak price reported: up to Tk 600 per kg in some markets

🏛 NBR Official's Statement

A senior NBR official told The Business Standard: "The prices of these two products have increased in the market recently. The reduction in import tax will create an opportunity to increase supply in the market, allowing consumers to purchase the products at somewhat lower prices."

📊 Strategic Context: Inflation and Food Prices

• 📊 Average inflation FY23-FY26: 9.3%
• 📊 Bottled soybean oil price: rose Tk 5 to Tk 204 per litre (ID 519)
• 📊 FAO assessment: 50 lakh people need emergency agri aid (ID 487)
• 📊 Government spending pressure: 42% of budget on non-discretionary items (ID 524)
• 📊 New pay scale: 142% salary increase adding to inflation pressure (ID 482)
• 📊 BB Tk 10,000cr agri refinance: 7% interest rate (ID 483)

🌏 Strategic Implications

• ✅ 40.5pp tax cut: from 61% to 20.5% — dramatic reduction
• ✅ Time-limited: 1 month at 20.5%, then 1 month at 30%, then back to 60%
• ✅ Supply increase objective: lower tax = cheaper imports = more supply
• ✅ Consumer relief: aims to reduce vegetable prices
• ⚠️ Temporary measure: returns to 60% after 60 days
• ⚠️ Domestic production impact: lower import tax may affect local farmers
• ⚠️ Revenue impact: lower tax collection for 2 months

The import tax cut on green chillies and tomatoes represents the government's targeted fiscal response to the sharp food price surge that has contributed to the 9.3 percent average inflation over the past four years. The 40.5 percentage point reduction (from 61% to 20.5%) is dramatic and time-limited — designed to quickly increase supply and bring down consumer prices for two essential food items. Combined with the broader inflation management measures (bottled soybean oil price regulation, agricultural refinance at 7%, FAO emergency aid coordination), the tax cut supports the government's effort to bring inflation down to the governor's 7 percent target through the LDC graduation transition period.