Why Total Tax Incidence is not the sum of the duty columns

Here is an exercise that catches almost everyone the first time.

Open a tariff line for a reconditioned car. Add up the six rates: CD, SD, VAT, AIT, RD and AT. You will get one number. Then look at the Total Tax Incidence printed on the same line. It will be a different number — often dramatically different.

Neither figure is wrong. They are answers to different questions. And the gap between them is the single most misunderstood thing about Bangladeshi import taxation.

TTI is a cascade, not a total

The six taxes are not six slices of the same cake. They are applied in sequence, and several of them are charged on a base that already includes the ones before. Tax is charged on tax.

The general shape of the sequence is this. Treat it as the structure rather than a formula to file with, because the precise base for each element is set by law and can be modified:

1. Start with the assessable value — broadly the CIF value plus landing charges.
2. CD is applied to the assessable value.
3. RD, where it applies, is also applied to the assessable value.
4. SD is applied to the assessable value plus CD plus RD. This is the first compounding step.
5. VAT is applied to the assessable value plus CD plus RD plus SD. This is the second, and the larger, compounding step.
6. AIT is applied to the assessable value.
7. AT is applied to a base that likewise includes the earlier duties.

Adding the percentages assumes each is charged on the same base. They are not. That assumption is what produces the wrong answer.

Why VAT is the amplifier

Look again at step 5. VAT is charged on a base that includes CD, RD and SD. On a line with modest rates this barely registers. On a line with heavy supplementary duty it changes everything.

Consider a simplified case. Assessable value 100. CD 25%. SD 100%. VAT 15%.

Simple addition of the rates gives 25 + 100 + 15 = 140%. The cascade gives 187.5%. The 47.5-point difference is entirely tax charged on tax — and that is before AIT, RD and AT are considered.

Notice where it comes from. VAT at 15% looks like a small component, but because it lands on a base of 250 rather than 100, it contributes 37.5 rather than 15. The VAT line is magnified by everything underneath it.

What this means when you negotiate

The cascade has a consequence that is easy to miss and worth real money.

Because later taxes are charged on earlier ones, a reduction in assessable value saves you more than the headline rate suggests. If the total incidence on a line is 187%, then every 100 taka of assessable value costs you 187 taka in tax. Reducing the assessable value by 1,000 taka does not save 1,000 taka — it saves roughly 1,870.

The same logic runs in reverse. An upward valuation adjustment during assessment hurts far more than the adjustment itself, because the whole cascade sits on top of it. On high-SD goods, a valuation dispute is never a small matter.

Reading the TTI figure on this site

The Total Tax Incidence shown on each tariff line is NBR's own published figure, reproduced from the Operative Tariff. It is not calculated by this site. That is deliberate: publishing a figure we computed ourselves would risk introducing our own arithmetic errors into something you might rely on.

Read it as: for every 100 taka of assessable value, approximately this many taka of total tax. A TTI of 127% means roughly 127 taka of tax on 100 taka of assessable value. The highest figure in the entire 2026-2027 tariff is 1,007.5%, on large-engine reconditioned cars — meaning the tax is more than ten times the value of the goods.

We checked the formula against all 7,411 lines

The sequence described above is usually stated as a general principle. We wanted to know whether it actually reproduces NBR's published figures, so we tested it against every ad-valorem line in the 2026-2027tariff.

Taking an assessable value of 100:

CD  = AV x cd%
RD  = AV x rd%
SD  = (AV + CD + RD) x sd%
VAT = (AV + CD + RD + SD) x vat%
AT  = (AV + CD + RD + SD) x at%
AIT = AV x ait%

TTI = CD + RD + SD + VAT + AT + AIT

Applied to all 7,411 tariff lines that carry a percentage TTI, this reproduces NBR's published TTI figure on every single one. Not approximately — exactly, to the published decimal place, with zero mismatches.

That is a useful thing to know. It means the published TTI is not an estimate or a rounded guide: it is a precise arithmetic consequence of the six rates, and the order of operations above is the order actually used. It also means you can reconstruct the tax on any line yourself and check your working against the published figure.

Note what the formula confirms about the bases: SD is charged on value plus CD plus RD; VAT and AT are both charged on that same base plus SD; and AIT alone is charged on the bare assessable value. AIT is the only one of the six that escapes the cascade entirely — consistent with it being income tax rather than an import levy.

Three things TTI does not include

TTI is a tax figure, not a landed-cost figure. Your actual cost to clear also includes:

• Port, handling and demurrage charges, which have nothing to do with the tariff and can be substantial if clearance is slow.
• C&F agency fees, documentation, LC charges and bank commission.
• Inland transport and insurance beyond the CIF point.

And, as always, TTI reflects the standard published position. SRO concessions, bond facilities and preferential rates can change the real figure substantially.

A sanity check worth doing

If someone quotes you a landed cost and you want to test whether it is plausible, work it the other way round. Take the assessable value, multiply by the TTI percentage, and add the result to the value. If the quote is far below that, either a concession is being applied — in which case ask which SRO — or something has been missed.

That five-second check has saved importers from accepting quotations that were never going to survive contact with the assessment.

Next

Everything above depends on the base the percentages are applied to. That number deserves an article of its own: assessable value explained.