Tariff commission wants VAT rebate to keep edible oil market stable

The Bangladesh Trade and Tariff Commission (BTTC) recommended the National Board of Revenue (NBR) grant VAT rebate on edible oil at all levels – including ex-bond, in-bond and stock, to help keep the supply and price of this cooking ingredient stable.

It made the suggestion to the NBR in a letter last week. The Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association had previously made the same request to the commerce ministry.

On March 14 and 16, the NBR had issued SROs granting VAT exemption to cooking oil.

Permission should be granted to importers so that they can release refined palm and soybean oil – imported before the SROs and currently waiting for ex-bond clearance – after paying five per cent VAT at the import level, instead of the usual 15 per cent, the BTTC recommended.

It also suggested granting the VAT rebate facility to everyone in the edible oil industry, who paid such taxes at different levels throughout this march.

The BTTC pointed out that the NBR had ordered an increasing adjustment, withdrawing tax rebate on edible oil ingredient imports because of the VAT exemption offered at the local supply level.

As the government introduced VAT exemption at local production and trade levels, and cut VAT by 10 per cent at the import level, further directives are necessary on how the 15 per cent increasing adjustment will be implemented on edible oil.

Traders on the other hand had demanded that a decreasing adjustment be introduced.

The government had cut VAT on the imports of unrefined soybean and palm oil from 15 per cent to 5 per cent to help rein in the cooking ingredient prices. But the existing customs laws are preventing edible oil refiners from taking advantage of this facility, the BTTC letter read.

In accordance with the Essential Products Marketing and Distributor Recruitment Order 2011, the commerce ministry dropped the bottled soybean oil prices by Tk 8 per litre to Tk 160 on March 20, after VAT was reduced on the cooking
ingredient.

It reduced the price of five-litre bottled soybean oil by Tk 35 to Tk 760, and the price of loose soybean oil by Tk 7 per litre to Tk 136.

Though the ministry set the price of loose soybean oil per litre at Tk 136, traders are selling the commodity for Tk 150 – Tk 160 per litre at retail level. Meanwhile bottled soybean oil is being sold for Tk 160 – Tk 170 per litre, shows Sunday’s market data collected from the Trading Corporation of Bangladesh.

Though refiners are getting tax benefits, the consumers are yet to get any leeway in terms of prices. 

The price of soybean oil has gone up by Tk 3 – Tk 5 per litre within just a week. When compared to government-set prices, consumers are paying Tk 7 – Tk 15 more per litre for loose soybean oil, and an extra Tk 10 per litre for bottled soybean oil.