The commerce ministry has asked the National Board of Revenue (NBR) to cut all kinds of duty, tax and tariff value on sunflower, olive and canola oils at import stage, aiming to cut dependency on widely consumed soybean and palm oils.
On Thursday, the ministry made the request to the revenue board to withdraw all taxes, duties and tariff values on imports of such cooking oils - both refined and crude - following a recent recommendation by the Bangladesh Trade and Tariff Commission (BTTC), said officials.
The move has also been taken to rein in the spiralling prices of soybean and also to bring relief among the consumers, they added.
Currently, the import of edible oils, other than soybean and palm, is subject to high duties and taxes along with minimum tariff value.
Rapeseed or canola oil (low uric acid) is popular edible oil worldwide and that is subject to paying a total of 37 per cent duty.
The import of refined sunflower oil is required to pay 32 per cent tax, including 10 per cent Customs Duty (CD), 15 per cent VAT, 5.0 per cent Advance Tax (AT) and a tariff value US$ 1.6 per kilogram.
The total duties and taxes on imported crude sunflower oil come to 31 per cent. The BTTC proposed to bring down its Total Tax Incidence to 20 per cent for both refined and crude sunflower oils.
The BTTC proposal says sunflower, refined olive and canola oils have less saturated fat and are often prescribed by physicians for health issues.
Most of the country's oil refineries refine palm and soybean crude. There is no import-tax benefit for refined soybean and palm oils.
A number of supplier countries of soybean have increased export duty on crude soybean oil following supply shortage of the item.
Currently, TTI on refined and crude olive oils is 37 per cent, and olive oil wrapped or canned 58.60 per cent, BTTC data showed. The BTTC recommended bringing it down to 25 per cent and 31 per cent respectively.
Sunflower, olive and canola oils are expensive in Bangladesh because of higher duty, tax and tariff value - those items are usually consumed by the affluent section of society.
The BTTC recommends rationalising the import duties on the 'expensive' edible oils in line with the exemptions offered to soybean and palm oils, as a fiscal solution to the market overheating.
In an official correspondence to the Ministry of Commerce, the BTTC has proposed cuts in duties and taxes on sunflower, olive, and canola oils in the upcoming budget for fiscal year 2022-23.
The BTTC believes that a cut in dependence is necessary due to the volatile price situation of soybean and palm oils on the international market and resultant high rates at home.
Edible oil prices have skyrocketed in the local markets in recent months because of supply crunch and the rise in their international prices. Allegations are rife that a section of unscrupulous traders have hiked the prices of edible oils taking hefty advantage of the situation.
In the meantime, a sudden decision of Indonesia to impose a ban on palm oil export has created deep worries for Bangladesh. Palm oil has a 65 per cent share in the local edible oil market while soybean 31 per cent. About 87 per cent of palm oil is sourced from Indonesia.
Malaysia is thinking about imposing a ban on its palm oil export too, said a high official of the commerce ministry.
In its letter to the commerce ministry, the BTTC said higher duties and taxes on sunflower, olive and canola had been discouraging their imports. Only 1,600 tonnes of other types of edible oil were imported in 2019-20 paying Tk 88.5 million in taxes. The annual oil consumption is estimated at 2.5 million tonnes.
The major share of edible oil consumption is grabbed by soybean and palm oils. Around 95 per cent of the local demand for edible oils is met through imports.
In March last, the NBR cut taxes on soybean oil and palm oil to 5.0 per cent, waiving its 15 per cent VAT on oil refining, 5.0 per cent at trading stage and 15 per cent at import stage.
The supply of vegetable oil has faced a blow globally since 2021 due for several reasons, including worker shortage, production fall and freight disruption due to the Covid-19 pandemic.
However, supply of sunflower oil has been facing supply disruption due to the Russia-Ukraine war.
Knowledgeable circles, however, expressed surprise over the BTTC suggestion to reduce dependence on palm and soybean oils by cutting duty and taxes on sunflower, olive and canola oils.
The government may offer fiscal incentives to these oils to help cut their prices. The imported mustard crude is subjected to 37 per cent duty and taxes and refined 58 per cent, said sources involved in the process.
© 2024 - All Rights with The Financial Express
