Govt mulls withdrawal of VAT on edible oil import

The National Board of Revenue (NBR) is considering withdrawing the value added tax (VAT) on import of edible oils to restrain soaring prices in the country.

However, no final decision has been made in this regard yet, according to NBR sources.

Earlier, the government reduced the regulatory duty on sugar imports from 30% to 20% and in a recent move extended that benefit for another two and a half months to stabilise the market.

The Bangladesh Tariff Commission and the Ministry of Commerce have urged the NBR several times to withdraw VAT on edible oil imports.

On Monday, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) also urged the government to withdraw VAT for three months.

On condition of anonymity, a senior official at the NBR told TBS, "We are reviewing the commerce ministry's proposal for reducing edible oil price. But, no decision has been made so far. Once made, it will come into effect quickly."  

Currently, there is an imposition of 15% VAT on edible oil at the import level. Moreover, there is another 15% VAT imposed at the retail level, which is adjustable with the import VAT.

However, the total amount of VAT importers need to pay has gone up as prices of imported edible oils increased in the international market, which created a downward pressure from importers to consumers.

As prices continue to soar in the last two months, demand for VAT exemption was reiterated from various quarters.

Despite the commerce ministry's request, the NBR does not recommend reducing VAT. In a recent pre-budget meeting, NBR Chairman Abu Hena Md Rahmatul Muneem argued against the exemption proposal.

Traders wanted government approval to hike the price of edible oil by Tk12 per litre on 27 February but the commerce ministry, in a meeting, suspended the price hike procedures.

Since then, prices of edible oil have been skyrocketing. According to the Trading Corporation of Bangladesh (TCB), edible oil prices rose by more than 24% in one year.