Bangladesh Trade and Tariff Commission (BTTC) has suggested imposing a single-stage VAT and tariff on edible oil instead of existing three-tier structure aiming to stabilize the prices of the key kitchen item.
Prices of edible oils have notably increased in the country in the last couple of weeks. Against a backdrop of the price hike in edible oils, BTTC on October 05 sat in a meeting and reviewed its prices.
As per the decision taken at the meeting, the commission put forward its recommendation to the National Board of Revenue (NBR) for reforming its three-tier tax structure on edible oil to a single-tier value added tax (VAT) and tariff to keep the market stable.
Single-tier means that some Tk 16,000 will have to be provided by the traders concerned on each tonne of edible oil at import stage only instead of collecting it at three stages.
On October 15, the commission again reminded the revenue board of its recommendation.
Currently, importers have to pay more than 20 per cent duty on imported edible oils, sector insiders said.
Earlier, Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association proposed fixing the duty at Tk 15,000 at import stage on each tonne of edible oil instead of collecting it at three stages.
Later, BTTC reviewed the proposal to know whether there will have any impact on government's revenue after implementation of the proposal.
When contacted, BTTC Member (TPD) Sha Md. Abu Raihan Alberuni said the sate-run commission found that government revenue collection would not be affected if the government agency collects Tk 16,000 at import stage on edible oil instead of collecting it at three stages.
He, however, said the government is working to keep the oil market stable.
According to the commerce ministry, the country imports 2.0-2.6 million tonnes of crude soybean and palm oils while the remaining are mustard, sunflower, rice bran and other edible oils annually against the domestic demand for 2.2 million tonnes of edible oil.
Of the imported soybean oil, some 30 per cent is sold in packaged form and the rest 70 per cent in loose form after refining, according to BTTC.
About 90 per cent of imported palm oil is sold in loose and only 10 per cent in packaged form.
Since the fiscal year 2013-14, importers provided Tk 15,000 at import stage only for importing edible oil that was effective until June 30, 2019.
Edible oil refiners already assured the government on Thursday of slashing the prices of palm oil and soybean oil (loose) by Tk 2.0 per litre at mill gate.
They gave the assurance in a meeting with Commerce Minister Tipu Munshi at his secretariat office on Thursday, according to a press release issued by the ministry.
After the meeting, the commerce minister told reporters that the government has been holding talks with the traders to keep stock, supply and prices of daily essentials stable during the ongoing pandemic.
He said, "Considering the current situation of the country, the refiners assured us of reducing the prices of soybean oil and palm oil by Tk 2.0 per litre at mill gate."
However, there is no visible impact of slashing prices of palm oil and soybean oil (loose) on the market.
Edible oil prices started increasing from late September and as of the third week of October, price of per litre bottled oil increased by Tk 5.0-Tk 7.0, which the refiners attributed to the global surge in edible oil prices.
According to the commerce ministry, the country imports 2.2-2.6 million tonnes of crude soybean and palm oils annually against the domestic demand for 2.2 million tonnes of edible oil.
Contacted, Director (corporate and regulatory affairs) of City Group Biswajit Saha told the FE that they have already started selling palm oil and soybean oil (loose) at reduced rates from mill gate.
The commerce ministry has asked the NBR to fix a single-stage VAT on import of edible oil, he added.
