Edible oil being made VAT-free

The National Board of Revenue (NBR) has withdrawn Value Added Tax (VAT) on refined soybean and palm oil at production and retail stages.

The revenue board on Monday in a statutory regulatory order (SRO) lifted the taxes for the period until June 30.

Meanwhile, Prime Minister Sheikh Hasina on the same say ordered the authorities concerned to withdraw VAT on soybean oil at all stages, including import.

However, the NBR did not withdraw VAT on soybean and palm oil imports, with its senior officials saying it would take some time to do so after the instruction from the Prime Minister Sheikh Hasina.

To withdraw VAT at the import level, the NBR has to take approval from the finance minister first. The revenue board will then send the file to the law ministry for vetting. After that, the NBR will issue an SRO in that regard.

The government decided to withdraw VAT to ease the current edible oil crisis in the market. Refiners, wholesalers, and retailers will enjoy the benefit.

NBR Member (VAT) Masud Sadik said it would take some time to withdraw VAT at the import stage. “We have just heard the prime minister’s instruction, but it will be implemented following some necessary procedures.”

City Group Director Biswajit Saha told The Business Post no tax benefits had been offered at the import level. “If 15 per cent VAT is withdrawn at the import stage, oil prices will fall by Tk 20 per litre.”

Commenting on the SRO, he said mill gate prices would reduce by Tk 3 while retail prices would go down by Tk 7 if purchased from department stores and super shops.

“Small store owners do not pay VAT, and that is why the impacts of VAT withdrawal will not be felt at that level,” he added.

Cabinet Secretary Khandker Anwarul Islam told a briefing the prime minister had ordered the VAT withdrawal at Monday’s cabinet meeting.

He said the cabinet had instructed the NBR about how to reduce VAT on edible oil. “It also directed the revenue board to reduce VAT on importing sugar and other essential commodities considering the present crisis.”

Anwarul further said the cabinet had instructed the NBR to reduce VAT on all items facing a supply crisis.

Commerce Minister Tipu Munshi told a press conference at his ministry on Monday the government had decided to withdraw VAT on edible oil by 15 per cent at all stages.

“We have no control over reducing prices in the international market. It depends on Brazil as we import 90 per cent of edible oil from there,” the minister also said.

He further said there was no crisis in the domestic market at present and the country has enough food stocks to meet the demand of the upcoming Ramadan.

“Hoarding during Ramadan creates problems. The Trading Corporation of Bangladesh is ready to provide food to one crore families,” Tipu said.

Low- and middle-income people have been suffering for the last few days as prices of essential commodities continue to soar.

A five-litre soybean oil bottle was sold at Tk 820 in Dhaka’s retail markets on Monday, up from Tk 795 set by the government.

Besides, a one-litre bottle was sold at Tk 165-170 and non-bottled palm oil at Tk 155-158. Non-bottled soybean oil was not available in the market.