NEIR stalled: Grey market fears grow as tax break expires

A tax relief measure on mobile phone imports is set to expire next week with no extension in the proposed budget, stoking fears of further grey market expansion as the National Equipment Identity Register (NEIR) remains unimplemented.

Grey market handsets already account for more than 60 percent of Bangladesh’s smartphone market, according to the Mobile Phone Industry Owners’ Association of Bangladesh, depriving the government of tax revenue and undercutting legitimate importers and local assemblers.

Industry insiders fear the withdrawal of the tax break without implementing NEIR could undermine efforts to curb illegal handset imports.

The tax relief was introduced on January 13 after protests by mobile phone importers against the government’s plan to roll out NEIR. During the unrest, roads were blocked, and installations at the Bangladesh Telecommunication Regulatory Commission (BTRC) office were vandalised.

To ease tensions, customs duty on imported finished handsets was cut to 10 percent from 25 percent, bringing total tax incidence down to 43.43 percent from 61.80 percent. Duty on components and raw materials for local assemblers was also lowered, to 5 percent from 10 percent.

“The tax reduction was introduced to support the transition toward NEIR implementation,” an official of the National Board of Revenue told The Daily Star, requesting anonymity. “If NEIR is implemented, the tax cut may be reconsidered.”

NEIR identifies and blocks stolen, cloned or unauthorised devices using each handset’s unique 15-digit IMEI code. It remained stalled under the interim government and has made no progress under the BNP-led administration, which took office in February.

BTRC Chairman Md Emdad ul Bari said the regulator plans to raise the tax issue with the government, as lower taxation remains important for controlling the grey market.

On the stalled rollout, he said implementation must be gradual, given the technical complexity involved. “This is not something that can be enforced overnight. It requires technical readiness, market alignment, and consumer awareness.”

On whether prices would rise once the relief expires, Bari said the impact may not be immediate, noting they did not fall significantly when taxes were cut in January.

“The market depends on multiple factors, including imports, grey market activity, local manufacturing, and assembly. So the discontinuation of the tax reduction may not immediately affect retail prices,” he said.

The NEIR project has been delayed for years. BTRC signed an agreement with Synesis-Radisson-Computer World for the system in November 2020 at a cost of Tk 29 crore, with a trial run beginning in July 2021.

During the trial, authorities found millions of phones in use were unauthorised and that hundreds of feature phones shared identical IMEI numbers -- complications that repeatedly pushed back full enforcement.

Mohammed Mesbah Uddin, chief marketing officer of Fair Group, which is preparing to resume Samsung handset production this year, said NEIR is now critical for local manufacturing.

“To protect investors, support local manufacturing, and curb illegal imports, NEIR implementation is no longer optional -- it is necessary,” he said.