NBR set to revise upward tariff value, levy 15pc VAT on sugar

The National Board of Revenue (NBR) is set to revise shortly the tariff value of both crude and refined sugar and levy value added tax (VAT) at a rate of 15 per cent on both.
Finance Minister AMA Muhith recently approved a proposal placed by the Board on upward revision of tariff value and slapping value-added tax (VAT) on the sweetener, officials said.
Sources concerned said the NBR will issue shortly a Statutory Regulatory Order (SRO) to this effect.
The NBR mooted the proposal following recommendation by the Bangladesh Sugar and Food Industries Corporation (BSFIC) to save the state sugar mills from going bust under the weight of stockpiles.
"Tariff value of raw sugar may go up to US$ 350 per tonne while for refined sugar to $430 per tonne," said one official.
Currently, tariff value is $320 and $400 per tonne of crude and refined sugar respectively.
The tax authority is set to impose 15 per cent VAT on both raw and refined sugar on the basis of tariff value.
Sugar industry circles predict that the hike in tariff and imposition of VAT might lead to an increase in sugar price ranging between Tk. 5.0 and Tk.7.0 per kilogram in the local market.
On Sunday per-kg sugar price was at Tk 42 at retail stage, marking a rise of between Tk.2.0 and Tk.3.0 over that of the previous day. The rise, sources said, indicates that a small group of refiners and traders who control sugar marketing in the country is already aware of the approval of the fiscal proposal on sugar import.  
   Officials said the BSFIC had proposed that the NBR increase the existing regulatory duty to 40 per cent from 20 per cent or impose 15 per cent VAT at ex-godown stage.
According to the customs law, the NBR can increase Regulatory Duty (RD) by maximum 25 per cent. The authorities concerned have found 5.0 per cent increase in RD will leave a little impact on sugar prices.    
Sugarcane-crushing season for fiscal year (FY) 2015-16 started in October. The public-sector sugar mills are burdened with previous stocks of sugar produced at higher costs than market price of the stuff. Storage of sugar will also face hurdles when newly produced sugar for the current year will be added to the previous stock.
In the proposal, the corporation said it is incurring losses due to piled-up stock of 137,129 tonnes until September 22, 2015, including last four years' carryover stock of sugar involving Tk 5.07 billion.
In August, the NBR fixed a tariff value of US$ 320 for per-tonne sugar. With the tariff value, the revenue board also imposed 20 per cent regulatory duty on the essential commodity.
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.
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