Bangladesh Trade and Tariff Commission (BTTC) on Sunday suggested halving the regularity duty (RD) on sugar imports, from existing 30 per cent to 15 per cent to keep the prices of the staple in the market under control during the upcoming fasting month Ramadan.
It also suggested intensifying surveillance by law-enforcers against the smuggling of sugar across the border areas.
The state entity requested the National Board of Revenue (NBR) for taking next course of action regarding the issue.
The tariff commission also believes that halving the regulatory duty will lead to the reduction of the smuggling of sugar. Formal imports will be encouraged by reducing duties and taxes on sugar import.
During the holy month of Ramadan, increased demand for sugar is created in the local market, according to the BTTC letter.
Sugar refiners should now open letter of Credits (LC) for importing sugar in order to stabilise the overall sugar supply chain.
Besides, in the last one month, the price of raw sugar in the global market was U$394, which now stood at US$ 476.19 (growth rate of 20.81 per cent).
In the light of the international prices trend and especially taking into consideration the increased demand during the upcoming Ramadan, the government should consider reducing the RD, to keep the sugar market stable and simultaneously encourage import of sugar in a formal manner.
At present, some 15 per cent VAT is applicable to import of raw sugar while the import duty (customs duty) is Tk 3,000 per tonne.
A 30 per cent, RD is also applicable to the import of sugar. In addition, the government imposes 2.0 per cent and 5.0 per cent advance income tax (AIT) and Advance Tax (AT) respectively. However, there is no VAT at the production stage of raw sugar.
The sugar refiners believe a cut of RD would reduce retail prices of the widely used sweetener.
In the financial 2023-24, the import of raw sugar has decreased by around 0.457 million tonnes as compared to the last five financial years.
At the same time, the import of refined sugar is also 13,000 tonnes in the last financial year as compared to the last five financial years. However, at that time, deficit of sugar supply in the market was not observed.
The state-entity BTTC assumed that smuggled sugar has been supplied to the local market as sugar is being sold at Tk 45-50 per kg in the neighbouring country India. On the other hand, per kg of sugar is sold at Tk 125-130 due to higher duty rate. The wide difference in prices between the two neighbouring nations has led to a trend of sugar smuggling.
The annual sugar demand is estimated to be between 2.0 and 2.2 million tonnes. To meet this demand, around 2.2-2.4 million tonnes of raw sugar are imported annually.
The agency observed that the collection of revenue increased despite reduce sugar import in the fiscal 2023-24.
Besides, around 50,000 tonnes of refined sugar are imported each year, according to the BTTC.
Currently, over 98 per cent of domestic sugar demand is met by private sugar mills, while state-owned mills contribute only 1-2 per cent.
There are five private sugar refineries in the country. They have been selling necessary sugar by refining raw sugar imported from the international market.
Currently, the daily production capacity of the private refiners is about 10,200 tonnes.
Sugar was selling at Tk 128-135 per kg in the Dhaka's kitchen markets, according to the TCB.
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