The National Board of Revenue (NBR) yesterday exempted import of crude soybean and palm oil of a 4 per cent advance tax (AT) to contain prices during Ramadan, the month of fasting for Muslims.
Though the move will alleviate the need for working capital and interest rate burden for refiners, it is unlikely to help reduce prices of edible oil which is at a high level now, said two leading processors.
"It is a good move. But we do not count this as expenses. So there will be no effect on prices," said Biswajit Saha, director of corporate and regulatory affairs of City Group, one of the biggest commodity importers and processors.
The revenue authority introduced the AT on imports from fiscal 2019-20 aiming to ensure that firms properly keep records of their sales and purchases.
It said the tax was adjustable with the total payable value added tax (VAT), meaning the money paid in excess would be refundable.
A good amount of refund claims got stuck earlier because of procedural bottlenecks. However, officials said the process of refunding excess amounts has been started.
Refiners have been demanding reduction of a 15 per cent VAT on edible oil on all three stages of the value chain on grounds that it was tough for traders to maintain records in line with the VAT law.
As a result, the burden of the indirect tax was passed onto the shoulders of consumers as the tax is added to the prices.
Md Shafiul Ather Taslim, director for finance of TK Group, said imposition of VAT on one of the stages instead of the three would be helpful.
An NBR official said the VAT was slapped on all three stages to ensure that businesses in this sector maintain proper books of accounts and pay tax and VAT properly.
Over the past couple of months, prices of edible oil, most of which has to be imported by Bangladesh to meet the annual domestic requirement, has been increasing, influenced by higher prices in the international market.
Yesterday, prices of a one-litre bottle of soybean oil were 2 per cent higher at Tk 135 to Tk 140 from Tk 130 to Tk 140 a month ago.
The prices are 28 per cent higher from that a year ago.
Palm oil prices increased 4 per cent to Tk 106 to Tk 110 per litre yesterday from Tk 102 to Tk 105 a month back, says data of market prices compiled by the Trading Corporation of Bangladesh.