Fuel prices in Bangladesh are set to fire up further despite global fall as the government is to levy in the new budget fixed-rated taxes on petroleum imports.
Sources have said the government may impose specific duty at fixed rates on all types of petroleum products and fuel oils in a bid to stabilise local prices and revenue earnings.
Currently, the import of fuels is subject to paying ad valorem tax (tax on value). Petroleum is one of the largest sources of revenue collection under the revenue board.
The fiscal measure would help the government to keep uninterrupted growth in revenue collection from fuel oils in spite of decline in import prices on the international market, experts said.
Prices of fuel oils have declined 18 per cent globally since last August until now after the government had adjusted the fuel prices.
From today (June 1, 2023,) import of fuel oils may require to pay specific taxes, if the proposal is accepted in parliament while the Finance Minister would place the national budget for fiscal year (FY) 2023-24.
The government is going to change the method of tax collection on petroleum products following its volatile prices on the international market.
Import of furnace oil may require paying specific duty at Tk 9108 per tonnes from the existing 10-percent tax.
High Speed Diesel, light diesel, naptha, J.P.4 kerosene-type jet fuels, J.P.4 kerosene-type jet fuels, other kerosene oils may be pegged
to payment of Tk 13.75 per litre instead of existing 10-percent duty.
Import of petroleum oils and oils obtained from bituminous minerals, crude may have to pay Tk 1117 per barrel instead of exiting 5.0-percent duty.
Motor spirit of H.B.O.C type, other motor spirits, including aviation spirit, spirit-type jet fuel and white spirit may be required to pay Tk 13.75 per litre.
A senior official of customs said the specific duty was being imposed on the products having volatile prices on the international market.
“Impact on shifting from ad valorem to specific taxes may vary on the prices on the basis of upward or downward revision in prices of fuel oils on the international market” he said.
“The NBR would be able to project its revenue receipt from a sector in a financial year if specific duty is imposed on it,” he added.
Usually, increase in international prices of petroleum products boosts government revenue collection as tax is collected on the import value of the product. In case of international price fall, import-tax collection declines.
Currently, prices of fuel oils declined on the international market, leaving an impact on the revenue collection. Tax-revenue collection fell short of target by Tk 375.33 billion until April 2023 with a single-digit growth over the previous year’s receipts.
Officials said the measure on petroleum products would give a boost to the revenue-collection growth in the upcoming fiscal year and also help offset loss of the current FY as it would be effective from June 1, 2023 under the ‘Provisional Collection of Taxes Act 1931 (Act No . XVI of 1931).
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