The National Board of Revenue (NBR) has issued a guideline on tax collection from energy drink producers, which have evaded taxes in the absence of clear definition of soft and animated drinks.
Taxmen alleged that some beverage groups are marketing the energy drinks as soft drinks to enjoy the lower rate of Supplementary Duty (SD).
According to the existing Value Added Tax (VAT) law, energy drinks producers are required to pay 25 per cent SD while soft drink makers 15 per cent.
As the issue surfaced, the VAT policy wing Tuesday issued an instruction to its field offices to distinguish energy drinks from soft drinks.
In the instruction, the board directed the field offices to send samples of energy drinks under their respective zones for chemical testing.
"On the basis of testing results, VAT offices will have to take measures against the companies who have sold energy drinks as soft drinks," the instruction letter said.
The companies will have to pay dues and penal taxes for producing energy drinks flouting the existing law, it said.
A senior VAT official estimated the government is expected to get Tk 500 million in arrears from the beverage companies.
The VAT wing also authorised its field offices to send samples to testing laboratory to confirm ingredients in case of complexities on taxation. Beverage companies will have to bear the testing cost as per the instruction.
After analysing data from different sources including chemical test, field-offices and internet, the VAT wing concluded that drinks containing caffeine, vitamin B, ginseng etc can be considered energy drink.
"Drinks with caffeine and one or more energy stimulating ingredients should be taxed as energy drinks," the order said.
According to the BSTI: "Carbonated beverage shall mean ready to drink non alcoholic beverages prepared from potable water and one or more of the ingredients (sugar, liquid glucose, dextrose monohydrate, invert sugar, fructose, honey, artificial sweetmeats, flavouring agents, food colors, acidulates, clouding agents, foaming agents, emulsifying and stabilizing agents, vitamins, sodium, bicarbonate, edible common salt, caffeine, preservatives (benzoic acid, sulfur dioxide), antioxidants, antifoaming agents) saturated with carbon dioxide in properly sealed container or dispensing units in a manner which ensures freedom from spoilage."
In an explanation to the NBR, the institute said any drinks using ingredients other than the above ones will not be considered soft drinks.
The NBR also tested the samples of drinks in Bangladesh Council of Scientific and Industrial Research (BCSIR) to find out differences in energy and soft drinks.
Currently, energy drinks producing companies are Akij group, Partex, SST beverage, Transcom and Pran.
Officials said following the instruction the taxmen will find out the non-compliant drinks companies, which evaded taxes labelling energy drinks as soft drinks in the bottle.
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