A ministerial attempt to cut AIT on meat business

The current advance income tax (AIT) on meat production and supply is 5-7 per cent, which is a big challenge for businesses, and a minister is trying to reduce it in the FY24 budget.

Fisheries and Livestock Minister SM Rezaul Karim has sought the National Board of Revenue’s (NBR) cooperation in fixing the AIT on meat and meat products at 2 per cent like other essentials, including rice, pulse, and wheat, to keep prices under control amidst soaring inflation.

He recently sent a letter to the NBR chairman in this regard, saying the higher AIT on meat and meat products compared to other essential goods is discouraging producers amidst the ongoing economic headwinds triggered by the Russia-Ukraine war and other challenges.

“If the NBR offers policy support and tax benefits, the livestock sector will flourish more in the near future. Exports will also rise as it is already a very important and promising sector in Bangladesh,” he said in the letter.

The current AIT on essential commodities, such as rice, wheat, pulse, flour, sugar, edible oil, potato, date, onion, garlic, ginger, turmeric, dry chilli, jute, yarn, and many others, is 2 per cent.

In the last couple of years, meat production exceeded the aggregated local demand, with the surplus amount being around seven lakh tonnes.

In the last financial year, the country produced 92.65 lakh tonnes of meat, up 9.8 per cent from 84.4 lakh tonnes in FY21, according to the Department of Livestock Services.

A maximum of 7 per cent tax is deducted at source on meat and meat product supply, which is not consistent with the net margin in this sector, the minister said in the letter.

Meat production, processing, and distribution companies have said they are running business at 10-12 per cent gross margin while the maximum net profit margin is not more than 1-3 per cent, he said.

Rezaul also said the sector is playing a pivotal role in meeting the country’s food demand as well as creating employment and entrepreneurs, causing the rural economy to grow fast.

He added that though producers are supplying safe and healthy meat and contributing to the national exchequer, the development of this potential sector is hindered by the lack of tax benefits and policy support.

Bengal Meat Chief Executive Officer AFM Asif told The Business Post reducing the AIT on meat business will help the industry grow while exports will also increase.

“We have been demanding this for long as high AIT is an obstacle to the industry’s growth. It is surprising but true that the non-compliant businesses in the industry do not suffer because of the high AIT; it is the big and compliant ones like us who do.”

He also said, “The existing AIT is much higher than our profit margin. That is why we sometimes are forced to increase prices to survive in business, but the burden of course eventually falls on consumers.”