REZAUL KARIM |
April 29, 2022 8:19:40 a.m.
April 30, 2022 10:56:18 p.m.
The Ministry of Commerce has asked the National Board of Revenue (NBR) to reduce all kinds of duties, taxes and tariff values on sunflower, olive and canola oils at the import stage, with the aim of reducing the reliance on widely consumed soybean and palm oils.
On Thursday, the ministry requested the revenue authority to remove all taxes, duties and tariff values on imports of these cooking oils – both refined and crude – following a recent recommendation by the Bangladesh Trade and Tariff Commission ( BTTC), officials said. .
The move was also made to curb soaring soybean prices and also to provide relief to consumers, they added.
Currently, the import of edible oils, other than soybean and palm oil, is subject to high duties and taxes as well as a minimum tariff value.
Rapeseed or canola oil (low uric acid) is a popular edible oil around the world and is subject to the payment of a total duty of 37%.
The import of refined sunflower oil is subject to the payment of a tax of 32%, including 10% customs duty (CD), 15% VAT, 5.0% advance tax (AT) and a value tariff of USD 1.6 per kilogram.
Total duties and taxes on imported crude sunflower oil amount to 31 percent. The BTTC proposed to reduce its total tax incidence to 20% for refined and crude sunflower oils.
The BTTC proposal says sunflower, refined olive and canola oils contain less saturated fat and are often prescribed by doctors for health conditions.
Most oil refineries in the country refine palm and soybean crude oil. There is no import tax advantage for refined soybean and palm oils.
A number of soybean supplying countries have increased export duties on crude soybean oil following a supply shortage of this item.
Currently, the TTI on refined and raw olive oils is 37% and packaged or canned olive oil is 58.60%, according to BTTC data. The BTTC recommended lowering it to 25% and 31% respectively.
Sunflower, olive and canola oils are expensive in Bangladesh due to the higher value of customs duties, taxes and duties – these products are generally consumed by the affluent strata of society.
The BTTC recommends streamlining import duties on “expensive” edible oils in line with the exemptions offered to soybean and palm oils, as a fiscal solution to an overheated market.
In official correspondence to the Department of Commerce, the BTTC has proposed reductions in duties and taxes on sunflower, olive and canola oils in the upcoming budget for fiscal year 2022-23.
The BTTC believes that a reduction in dependency is necessary due to the volatile situation of soybean and palm oil prices in the international market and the resulting high rates in the country.
Edible oil prices have skyrocketed in local markets in recent months due to supply shortages and rising international prices. Allegations are rife that some of the unscrupulous traders have raised the prices of edible oils largely taking advantage of the situation.
Meanwhile, a sudden decision by Indonesia to ban the export of palm oil has created deep concerns for Bangladesh. Palm oil accounts for 65% of the local edible oil market, while soybeans hold 31%. About 87% of palm oil comes from Indonesia.
Malaysia is also considering banning its palm oil exports, a senior Commerce Ministry official said.
In its letter to the Commerce Ministry, the BTTC said higher duties and taxes on sunflower, olive and canola have discouraged their imports. Only 1,600 tons of other types of edible oils were imported in 2019-2020, paying Tk 88.5 million in taxes. Annual oil consumption is estimated at 2.5 million tons.
Most of the consumption of edible oils is captured by soybean and palm oils. About 95% of the local demand for edible oils is met by imports.
Last March, the NBR reduced taxes on soybean oil and palm oil to 5.0%, removing its VAT of 15% on oil refining, 5.0% at the commercial stage and 15% at the import stage.
Vegetable oil supply has been hit globally since 2021 for several reasons, including labor shortages, falling production and freight disruptions due to the Covid-19 pandemic. 19.
However, the sunflower oil supply faced a supply disruption due to the Russian-Ukrainian war.
However, informed circles have expressed surprise at the BTTC’s suggestion to reduce dependence on palm and soybean oils by reducing duties and taxes on sunflower, olive and canola oils. .
The government can offer tax incentives to these oils to help lower their prices. Imported raw mustard is subject to 37% duty and tax and refined at 58%, sources involved in the process said.