The National Board of Revenue (NBR) on 11th April (Sunday) exempted 4 per cent advance tax (AT) of the import of crude soybean and palm oil to keep prices stable during Ramadan.
Over the last few months, prices of edible oil have been increasing, influenced by higher prices in the international market. Most of the amount has to be imported by Bangladesh in line with the huge annual domestic demand.
The revenue body introduced the AT on imports from fiscal 2019-20. The tax was adjustable with the total payable value added tax (VAT), meaning the money paid in excess would be refundable.
Nonetheless, a good amount of refund claims got stuck earlier because of procedural bottlenecks though officials claimed the process of refunding excess amounts has been started.
Refiners have been demanding reduction of a 15 per cent VAT on edible oil on all three stages of the value chain on grounds that it was tough for traders to maintain records according to the VAT law.
As a result, the burden of the indirect tax was passed onto the shoulders of consumers as the tax is added to the prices.
However, Biswajit Saha, director of corporate and regulatory affairs of City Group – one of the biggest commodity importers and processors said, “It is a good move. But we do not count this as expenses. So, there will be no effect on prices.”
According to the processors, though the move will alleviate the need for working capital and interest rate burden for refiners, it is unlikely to help reduce prices of edible oil which is at a high level now.
Director for finance of TK Group, Md Shafiul Ather Taslim said the imposition of VAT on one of the stages instead of the three would be helpful.
An NBR official said the VAT was removed on all three stages to ensure that businesses in this sector maintain proper books of accounts and pay tax and VAT properly.
As of 11th April (Sunday), prices of a one-litre bottle of soybean oil were 2 per cent higher at Tk 135 to Tk 140 from Tk 130 to Tk 140 a month ago. The prices are 28 per cent higher from that a year ago.
Palm oil prices increased 4 per cent to Tk 106 to Tk 110 per litre yesterday from Tk 102 to Tk 105 a month back, says data of market prices compiled by the Trading Corporation of Bangladesh.
The mill gate, wholesale and retail prices of each five-litre jars of soybean oil have been set at Tk620, Tk640 and Tk660 respectively.