CAO asks NBR to rethink flat duty on lubricant import
Sunday, 15 July 2007
The Chief Adviser's Office (CA) has asked the National Board of Revenue (NBR) to review its imposition of a flat duty on import of all grades of lubricants in the current budget after a similar request from the Energy Ministry, reports bdnews24.com.
Earlier, importers had warned that the flat duty on all grades of lubricants would put a spanner in the wheel of business and hit agriculture and transport sectors, the main users of mono grade lubricant.
The interim administration imposed a uniform specific duty of Tk 39,000 per tonne in the current budget whatever the category of lubricant is.
"It doesn't seem rational when the flat rate escalates the duty for mono grade by about 50 per cent and reduces the duty for synthetic higher grade by about 65 per cent," according to a letter signed by Mostafa Kamal Haider, additional secretary to the CA's office, which was sent to the NBR Tuesday.
The new duty rate is likely to benefit the high-end users at the cost of low-end users, the letter mentioned.
The CA's office has also asked the NBR to review the new duty rate to bring a balance between different categories of lubricants. Earlier on June 17, the Energy and Mineral Resources Ministry had also asked the NBR to review the proposed flat duty on all lubricants.
According to the Oil and Lubricant Importers Association of Bangladesh (OLIAB), the new duty rate will benefit the higher quality lubricant importers with tax incidence benefits ranging from Tk 30,000 to Tk 195,000 per tonne.
The customs duty and VAT on a higher quality lubricant were as high as Tk 204,000 a tonne, for which an importer of the same kind now has to pay only Tk 39,000 per tonne causing a huge revenue loss to the government.
On the other hand, OLIAB said that an importer of mono grade lubricant had to pay Tk 39,000 per tonne as duty instead of the previous Tk 20,282 a tonne.
"The finance adviser himself had asked us to impose a specific duty to prevent under-invoicing," a senior NBR official, asking not to be named, told the news agency.
"NBR is not the decision-maker in this regard. If the government asks us to withdraw the flat duty and impose the previous one, we'll do it," the official said Saturday.
The NBR official also said that the specific duty had been designed to stop 'massive tax evasion' by a few importers through under-valuation of prices.
But Faisal Mahbub, president of OLIAB, said that the flat duty was designed to benefit branded multi-national companies, like Mobil.
More than 100 grades of lubricants are manufactured broadly under the mono, multi, synthetic, industrial and marine grades, according to the association.
Mono grade, used by irrigation pumps, tractors, trucks and country boats, constitutes 70 per cent of Bangladesh's total lubricant imports.
According to the NBR statistics, Bangladesh imported 21,471.79 tonnes of finished lubricants worth Tk 1790 million (179 crore) in the first 11 months of the just concluded 2006-07 fiscal year.
Earlier, importers had warned that the flat duty on all grades of lubricants would put a spanner in the wheel of business and hit agriculture and transport sectors, the main users of mono grade lubricant.
The interim administration imposed a uniform specific duty of Tk 39,000 per tonne in the current budget whatever the category of lubricant is.
"It doesn't seem rational when the flat rate escalates the duty for mono grade by about 50 per cent and reduces the duty for synthetic higher grade by about 65 per cent," according to a letter signed by Mostafa Kamal Haider, additional secretary to the CA's office, which was sent to the NBR Tuesday.
The new duty rate is likely to benefit the high-end users at the cost of low-end users, the letter mentioned.
The CA's office has also asked the NBR to review the new duty rate to bring a balance between different categories of lubricants. Earlier on June 17, the Energy and Mineral Resources Ministry had also asked the NBR to review the proposed flat duty on all lubricants.
According to the Oil and Lubricant Importers Association of Bangladesh (OLIAB), the new duty rate will benefit the higher quality lubricant importers with tax incidence benefits ranging from Tk 30,000 to Tk 195,000 per tonne.
The customs duty and VAT on a higher quality lubricant were as high as Tk 204,000 a tonne, for which an importer of the same kind now has to pay only Tk 39,000 per tonne causing a huge revenue loss to the government.
On the other hand, OLIAB said that an importer of mono grade lubricant had to pay Tk 39,000 per tonne as duty instead of the previous Tk 20,282 a tonne.
"The finance adviser himself had asked us to impose a specific duty to prevent under-invoicing," a senior NBR official, asking not to be named, told the news agency.
"NBR is not the decision-maker in this regard. If the government asks us to withdraw the flat duty and impose the previous one, we'll do it," the official said Saturday.
The NBR official also said that the specific duty had been designed to stop 'massive tax evasion' by a few importers through under-valuation of prices.
But Faisal Mahbub, president of OLIAB, said that the flat duty was designed to benefit branded multi-national companies, like Mobil.
More than 100 grades of lubricants are manufactured broadly under the mono, multi, synthetic, industrial and marine grades, according to the association.
Mono grade, used by irrigation pumps, tractors, trucks and country boats, constitutes 70 per cent of Bangladesh's total lubricant imports.
According to the NBR statistics, Bangladesh imported 21,471.79 tonnes of finished lubricants worth Tk 1790 million (179 crore) in the first 11 months of the just concluded 2006-07 fiscal year.