Importing machinery into Bangladesh: why most of chapter 84 is taxed at 1%
Chapter 84 is the largest chapter in the Bangladesh tariff: 648 tariff lines covering boilers, pumps, engines, textile machinery, printing presses, refrigeration, and most of what a factory is built from.
It is also the chapter where the tariff is most generous — and where the gap between the machine and its parts catches importers out most expensively.
The headline: machinery is barely taxed
Look at how Customs Duty is distributed across the chapter:
| CD rate | Tariff lines | Share of chapter |
|---|---|---|
| 1% | 388 | 60% |
| 0% | 84 | 13% |
| 25% | 67 | 10% |
| 10% | 60 | 9% |
| 5% | 38 | 6% |
Nearly three quarters of chapter 84 sits at 1% customs duty or lower. That is deliberate. Bangladesh wants capital equipment in the country, because machinery builds the factories that employ people and generate exports. Taxing a loom heavily would be taxing the garment industry.
Total Tax Incidence across the chapter runs from 7.5% to 223.5%, with a median of just 28.73% — the lowest median of any major import sector.
What 28.73% is made of
That median figure appears so often it is worth knowing by heart. It is the tax on a line with CD 1%, no SD, no RD, VAT 15%, AIT 5%, AT 7.5% — for example 84021100, watertube boilers producing more than 45 tonnes of steam per hour.
On an assessable value of BDT 5,000,000:
| Step | Base (BDT) | Rate | Tax (BDT) |
|---|---|---|---|
| Customs Duty | 5,000,000 | 1% | 50,000 |
| Supplementary Duty | 5,050,000 | 0% | 0 |
| VAT | 5,050,000 | 15% | 757,500 |
| Advance Tax | 5,050,000 | 7.5% | 378,750 |
| Advance Income Tax | 5,000,000 | 5% | 250,000 |
| Total tax | 1,436,250 | ||
Notice the composition. Customs duty is 3.5% of the tax bill. The rest is VAT, AT and AIT — and for a VAT-registered manufacturer, most of that is recoverable or creditable. The real, unrecoverable cost of importing this boiler is close to the 1% customs duty.
That is the single most useful thing to understand about chapter 84: for a compliant registered importer, most machinery is nearly tax-free in economic terms, even though the headline TTI reads 28.73%.
The parts trap
Here is where it goes wrong.
A complete air conditioning machine and the parts for one are classified on different lines, and they are not treated alike:
| Code | Goods | CD | SD | TTI |
|---|---|---|---|---|
| 84159010 | Indoor or outdoor unit | 25% | 100% | 223.5% |
| 84159090 | Parts of other air conditioning machine | 25% | 60% | 159.8% |
| 84149010 | Parts of fan | 25% | 45% | 135.91% |
| 84021100 | Watertube boiler | 1% | 0% | 28.73% |
Air conditioning is treated as a consumer comfort good, not as capital machinery, and carries 100% supplementary duty. The parts do not escape supplementary duty — they carry it at a reduced rate, 60% for air conditioner parts and 45% for fan parts, on top of 25% customs duty. Meanwhile an industrial boiler — vastly more expensive, vastly more "industrial" — pays 1%.
That graduation is deliberate. Importing the machine whole costs 223.5%; importing the parts costs 159.8%. The tariff leaves a 63.7 point margin in favour of assembling locally, which is the same logic that drives the CKD and SKD regime for vehicles.
The lesson is that "it is a machine, so it must be 1%" is a false assumption. Chapter 84 contains both the cheapest and some of the most heavily taxed lines you will meet, and the distinction is about what the goods are for, not how complex they are.
The lowest lines in the chapter
At the other extreme, 84212920 (haemodialyser, artificial kidney) and 84212930 (dialysis filter) carry TTI 7.5% with zero customs duty — medical equipment the state has decided to let in essentially untaxed.
Worked example: an air conditioner at 223.5%
The boiler above showed the chapter at its most generous. This is the same chapter at its harshest. 84158190, air conditioning machines with a refrigerating unit: CD 25%, RD 5%, SD 100%, VAT 15%, AT 7.5%, AIT 5%. On an assessable value of BDT 1,000,000:
| Step | Base (BDT) | Rate | Tax (BDT) |
|---|---|---|---|
| Customs Duty | 1,000,000 | 25% | 250,000 |
| Regulatory Duty | 1,000,000 | 5% | 50,000 |
| Supplementary Duty | 1,300,000 | 100% | 1,300,000 |
| VAT | 2,600,000 | 15% | 390,000 |
| Advance Tax | 2,600,000 | 7.5% | 195,000 |
| Advance Income Tax | 1,000,000 | 5% | 50,000 |
| Total tax | 2,235,000 | ||
The supplementary duty doubles the base before VAT is even considered. VAT of 390,000 on a million-taka machine is not a 15% tax in any meaningful sense — it is 15% of a figure the SD inflated.
Set the two examples side by side. A boiler and an air conditioner are both machines that move heat, both from chapter 84, both imported by businesses:
| Boiler 84021100 | Air conditioner 84158190 | |
|---|---|---|
| Customs duty | 1% | 25% |
| Supplementary duty | 0% | 100% |
| Total incidence | 28.73% | 223.5% |
| Tax per BDT 1,000,000 | 287,300 | 2,235,000 |
An eightfold difference inside one chapter. Nothing about the engineering explains it; the tariff is asking who benefits, not how the machine works.
How concentrated the chapter really is
Chapter 84 is not merely cheap on average — it is cheap in a very uniform way. 363 of its 648 lines sit at exactly 28.73%, the figure worked through above. That is 56% of the chapter on a single rate.
| Measure | Chapter 84 | Chapter 85 |
|---|---|---|
| Tariff lines | 648 | 412 |
| Average TTI | 35.72% | 52.09% |
| Lines at CD 1% or less | 472 (73%) | 73 (18%) |
| Lines carrying RD | 68 (11%) | 170 (41%) |
| Lines carrying SD | 35 (5%) | 51 (12%) |
| VAT-exempt lines | 55 | 4 |
Every column favours chapter 84. Mechanical equipment attracts regulatory duty on one line in nine; electrical equipment on two lines in five. If your goods could credibly classify into either chapter, that difference is worth establishing before the declaration is filed, not after.
The near-free lines
Fifty-five lines in chapter 84 carry no VAT at all, and the lowest of them are striking:
| Code | Goods | CD | VAT | TTI |
|---|---|---|---|---|
| 84212920 | Haemodialyser (artificial kidney) | 0% | 0% | 7.5% |
| 84071000 | Aircraft spark-ignition piston engines | 1% | 0% | 8.58% |
| 84433210 | Computer printer | 0% | 0% | 9.5% |
| 84713000 | Laptop, portable ADP machine ≤10 kg | 0% | 0% | 9.5% |
The haemodialyser at 7.5% is the cheapest line in the chapter, and its entire tax is Advance Tax — no customs duty, no VAT, not even AIT. For a registered importer the AT is adjustable, which makes a dialysis machine very close to genuinely free to import.
Laptops and printers at 9.5% follow the same reasoning as the computer monitor in chapter 85. Note that the laptop line carries a 10 kg weight limit: a heavier portable machine falls outside it and is taxed on an entirely different basis. As ever in these two chapters, a specification in the description is doing the real work.
Practical points for chapter 84
- Check whether your line is capital machinery or a consumer appliance. The tariff draws that line firmly, and it is worth hundreds of percentage points.
- Classify parts separately. Spares shipped alongside a machine are not automatically classified with it. A consignment that is 90% machine and 10% spares is two tariff treatments, not one.
- Ask about SRO concessions before you accept the published rate. Capital machinery for export-oriented industry is one of the most heavily concessioned categories in Bangladesh. The published 1% may not even be what you pay.
- Register for VAT if you are importing at scale. On a 28.73% line, roughly 22 points of that is VAT and AT. A registered business adjusts it; an unregistered one simply pays it.
Browse chapter 84 to see all 86 headings, and compare with chapter 85 for electrical machinery, which is taxed on a noticeably different basis.