Govt raises both tariff value, VAT on sugar

The government raised tariff value on import of both crude and raw sugar and also imposed Value Added Tax (VAT) at a rate of 15 per cent on the essential item to bail out local mills.
According to Statutory Regulatory Order (SRO) issued by the National Board of Revenue (NBR) Tuesday, the tariff value of raw sugar went up to US$ 350 per tonne while of refined stuff increased to $430 a tonne. Tariff value of per-tonne sugar was $320 and $400 for crude and refined sugar respectively.
The revenue authority also imposed 15 per cent VAT on both raw and refined sugar on the basis of the tariff value.
Price of crude and refined sugar both may go up by Tk 5.50 and Tk 7.0 per kilogram respectively on the local market with the hike, sugar-industry circles predict.
However, prices of sugar have already been jacked up by businesses to Tk 46-47 per kg before the issuance of the SRO while the information had gone flying about possible duty hike on the commodity.
Mahbub Hossain, proprietor of Mahbub General Store in city's Dilu Road, Maghbazar, said prices of sugar had been showing an upward trend during the last few days.
"We are selling per-kg sugar at Tk 46-47, which was Tk 39-40 last month," he added.
He said the information on tax hike might have heated up the sugar market.   
A senior customs official said tax hike would not leave any significant impact on the prices of sugar on the local market.
"Price may go up to Tk 4.0-5.0 per kg of sugar due to upward revision of tariff value and imposition of VAT if other costs, including import and carrying expenditure, remain same," he said.
The National Board of Revenue under the Internal Resources Division (IRD) increased the duty and imposed VAT on import of sugar following recommendation by Bangladesh Sugar and Food Industries Corporation (BSFIC).
At the November 23 cabinet meeting, the Prime Minister had instructed the NBR to take necessary steps in line with the proposal of the ministry of industries, the sources said.
In the SRO, customs raised tariff value of raw sugar not containing added flavouring or colouring matter: Beet sugar, cane sugar, other cane sugar to US$ 350 per tonne. Tariff value for other sorts of flavouring or colouring, other categories of sugar has been set at $430.
Officials said sugar was a VAT-free commodity. With the recent SRO, the customs authority imposed VAT on the product following a market slump.
According to BSFIC, sugarcane-crushing season for fiscal year (FY) 2015-16 started in October.
State-owned sugar mills are burdened with previous stocks of sugar produced at higher costs than market price of the stuff. Storage of sugar will also face hurdles when newly produced sugar for the current year will be added to the previous stock.
The BSFIC proposal said it was incurring losses due to piled-up stock of 137,129 tonnes until September 22, 2015, including last four years' carryover amount, involving Tk 5.07 billion.
In August, the NBR had fixed a tariff value US$ 320 for per-tonne sugar. With the tariff value, the revenue board also imposed 20 per cent regulatory duty on the essential commodity.
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