To facilitate a reduction in fuel import duty, the government on Monday proposed changes affecting how Bangladesh Petroleum Corporation (BPC) pays customs charges on oil imports.
BPC currently imports both crude and refined oil (diesel, kerosene, petrol, and octane) from the international market.
At present, regardless of the import price, BPC pays duty based on a fixed value (tariff value).
In the proposed budget, a change has been suggested: instead of using the tariff value, customs duty will be levied based on the actual purchase price (invoice value).
This would increase BPC’s costs. To keep the costs unchanged, a proposal has been made to reduce the customs duty rate.
According to the proposal, the import duty on crude oil will be reduced from 5% to 1%, and on various refined fuels, from 10% to 3%.
This adjustment is expected to keep overall customs revenue roughly the same, ensuring BPC’s expenses remain unaffected.
However, if global prices rise, the corresponding increase in duty collection could raise BPC’s import costs.
The budget proposal notes that since 2014, tariff values have been in effect for fuel oil imports.
Currently, the actual import prices are higher than the tariff values.
Under customs law, if the price is higher, duties must be calculated based on the actual purchase price.
While private sector importers are already paying duty on the actual price, BPC has continued to pay based on tariff values.
As a result, the National Board of Revenue (NBR) is owed money, which BPC has not been settling.
To address this, the Ministry of Power, Energy, and Mineral Resources has requested that customs valuation be aligned with actual purchase prices, in a manner that maintains government revenue at levels similar to the past.
However, industry insiders note that although BPC’s fuel import costs will remain steady under the new structure, the private sector will benefit.
Since private importers already pay duty on actual prices, the reduction in duty rates will lower their import costs.
Notably, Finance Adviser Dr Salehuddin Ahmed presented the proposed budget for the 2025-2026 fiscal year, amounting to Tk7,89,999 crore, in a televised speech on Monday.