The government is set to start phasing out the tariff value system from the upcoming fiscal year (FY), 2018-19, as it is found that consumers are not getting benefit of it.
The National Board of Revenue (NBR) is likely to withdraw tariff value for some consumer products in the budget for FY ‘19. The board has submitted a list of those for consideration of Finance Minister A M A Muhith, officials said.
Following a recent instruction of the minister, the NBR conducted an analysis on a number of products under tariff value and compared their consumer prices.
In the analysis, the board found a wide gap between the selling prices and the NBR-fixed tariff value of those items, they said.
There are some 84 items, the tariff value of which is fixed by the government at the local stage to impose 15 per cent VAT.
Officials said the businesses are getting benefit of the tariff value system, which is meant for reining in the prices of essential consumer products.
There are a number of products, which are not considered essential ones to get the benefit of tariff value, said a senior tax official.
Tariff value of those products has not been reviewed or updated for years in line with inflation or increase in their market prices, he said.
Juice, biscuit, sauce and ketchup, sunglass, frames of spectacles, and packed spices, not considered essential products, are enjoying tariff value as per VAT law.
Tariff value for those items is much lower than that of their market value, he added.
Tariff value for packed spices has been set at Tk 40 per kilogram, that of biscuit Tk 60 to Tk 120 per kg, and sauce and juice Tk 20 per kg, while these products are selling at much higher prices in the market, the NBR analysis showed.
The officials said VAT is supposed to be imposed on the selling prices of the products as per VAT Law 1991.
Sources said the list of products under tariff value may be cut down in the budget for FY 19. NBR may impose VAT at reduced rate on the products that would be excluded from the list of tariff value.
