CBU, CKD and SKD: why the same vehicle is taxed three different ways

Three abbreviations decide a large part of what you pay on any vehicle imported into Bangladesh: CBU, CKD and SKD. They describe how assembled the goods are when they cross the border, and the tariff treats each one as a different product with a different code and a different rate.

Get the distinction wrong and you are not making a paperwork error. You are declaring the wrong product.

What the three terms mean

• CBU — Completely Built Up. The vehicle arrives finished. Drive it off the ship, register it, sell it.
• CKD — Completely Knocked Down. It arrives as component parts to be assembled in Bangladesh. Substantial local work is required: welding, painting, fitting, final assembly.
• SKD — Semi Knocked Down. Between the two. Major sub-assemblies arrive already built — often a painted body and a complete engine — and relatively little work remains.

The logic behind the rates is straightforward industrial policy. The more work that happens inside Bangladesh, the less tax is charged. A country that taxes CBU and CKD identically has no assembly industry; one that taxes CKD far lower builds factories and employs people.

What the gap is actually worth

Motorcycles show it most cleanly, because the tariff has explicit CBU and CKD lines for the same machine:

Identical machine. Identical customs duty of 25%. The difference is 63.7 percentage points of total tax, created entirely by supplementary duty — 60% versus 20%.

The pattern repeats on the smallest machines: 87111011 (not over 50cc, CBU) is 159.80%, while 87111021 (not over 50cc, CKD, four-stroke) is 96.10%. The same 63-point gap.

Worked example

A consignment with an assessable value of BDT 20,000,000:

Saving: BDT 12,740,000 on a single consignment.

That figure is why assembly plants exist in Bangladesh, and it is also why the condition of imported goods gets scrutinised carefully at the port.

The part people get wrong

The saving is real, but it is payment for work you must actually do. It is not a discount for describing goods differently on an invoice.

Several things usually need to be true before a CKD rate applies, and they are not matters of opinion:

• The goods must genuinely arrive disassembled, to the degree the tariff line describes.
• You generally need an assembly facility and, in most cases, recognition or approval of it.
• What counts as CKD rather than SKD is defined, and the definition can change with the annual budget or by SRO.
• Customs can and does inspect. A container declared CKD that contains near-complete vehicles is a misdeclaration, not a classification dispute.

We cannot tell you whether your particular operation qualifies — that depends on your approvals, your facility and current SROs. Confirm it with your C&F agent and with NBR before you commit to a shipment. What we can tell you precisely is what each line is taxed at, which is what the rest of this site is for.

Why there is no single "CKD discount"

A common misunderstanding is that CKD attracts some fixed percentage reduction. It does not. The tariff simply contains separate lines, and each carries its own rates. Sometimes the gap is large, sometimes small, and occasionally there is no separate CKD line at all.

Notice too that the CKD advantage disappears entirely in some cases. A two-stroke motorcycle is taxed at 462.38% whether it arrives CBU or CKD — SD is 250% either way. When the policy intent is to stop the import altogether, local assembly earns no relief.

Equally, a moped with a four-stroke engine carries SD of 0% in CBU form already, with a TTI of 64.25%, so there is little to gain by knocking it down.

The rule, then: look up both lines before assuming anything.

SKD is not a category in the Bangladesh tariff

This is worth stating plainly, because it surprises people who have worked with other countries' schedules. Searching all 7,469 tariff lines gives:

SKD is a real industry term and a real manufacturing practice, but it has no line of its own in the Operative Tariff. A semi-knocked-down consignment must be classified as either CKD or CBU, and the classification decides the duty.

That is where disputes arise. An importer ships a partially assembled vehicle expecting an intermediate rate; no intermediate rate exists. Customs must decide which side of a binary line the consignment falls on, and the difference is often a hundred percentage points or more. If your assembly model is genuinely SKD, establish in advance which of the two categories it will be assessed under — do not assume it will be split proportionally, because the schedule offers no mechanism to do so.

What the gap is worth across the whole of chapter 87

Rather than compare single lines, compare every line that names each form:

The average CKD line is taxed 87.4 percentage points below the average CBU line. On a consignment with an assessable value of BDT 10,000,000, that difference is approximately BDT 8.7 million of tax — which is why vehicle assembly plants exist in Bangladesh at all.

Note too that the floor is lower for CKD but the ceiling is not much lower. Knocking a vehicle down does not rescue it from a punitive band; it moves it down within whatever band its engine and purpose place it in.

Buses: where the discount is largest

Passenger transport shows the policy at its most deliberate. Compare built-up and CKD lines within heading 8702:

A CKD bus at 23.25% is among the cheapest vehicle lines in the tariff. A built-up minibus of fifteen seats or fewer pays 112.03% — nearly five times as much.

The logic is consistent: a 40-seat bus is public transport infrastructure, a 15-seat vehicle starts to look like a private carrier. Seating capacity, not size or engine, is doing the classification work, and the thresholds are absolute. A sixteenth seat changes the tariff treatment of the entire vehicle.

Fuel type stacks on top

Within the same heading, 87029011 — a built-up double decker running on CNG, LPG or LNG — carries a total incidence of 13.88%, against 33.63% for the diesel equivalent at 87021010.

Same vehicle, same body, same seating. The fuel system alone is worth 19.75 percentage points. When you are specifying a vehicle for import, the drivetrain decision is a tax decision as much as an engineering one, and it should be made before the order is placed rather than after.

Reading a knocked-down line correctly

Three habits prevent most of the expensive mistakes:

Read the whole description, not the first clause. Lines in chapter 87 routinely carry four or five qualifying conditions — engine type, capacity, assembly state, seating, fuel, new or reconditioned. Any one of them can move the line.

Treat CKD status as something you must evidence. It is a condition of the goods at the moment of import, not a description of your intentions. Packing lists, assembly schedules and plant documentation are what support the classification if it is questioned.

Price both routes before committing. The CKD advantage is large on average but not universal, and for two-stroke motorcycles it is exactly zero. Run the full cascade on both the CBU and CKD line for your specific goods rather than assuming the knocked-down route is cheaper.

Practical points

• Find the actual CBU and CKD codes for your exact product and compare them. Do not assume a gap exists.
• The descriptions carry the conditions — "four stroke", "two stroke", engine capacity, CBU or CKD are all written into the tariff description itself.
• Check for an SRO. Assembly concessions are frequently delivered by SRO rather than by the tariff schedule, and SROs carry conditions about facilities and approvals.
• Budget season matters. CBU/CKD differentials are a standard instrument of the June budget. A rate you relied on last year may have moved.

See the full contrast in importing a motorcycle versus a car, or browse chapter 87 directly.