After receiving the letter from the Ministry of Commerce, the National Board of Revenue (NBR) has been holding one meeting after another to reduce the revenue on cooking oil.
A decision to reduce VAT on cooking oil imports by at least 15% may come soon.
According to the board of revenue, the government collects VAT on cooking oil on several stairs. The import duty on soybean and palm oil among cooking oils is currently fixed at 15% VAT and 5% advance tax (AT).
This is followed by a 15% VAT on production and a 5% VAT on the maximum retail price at sales and supply.
Seeking anonymity, an NBR official told Dhaka Tribune that the proposal to withdraw VAT is being actively considered, and a proposal in this regard will be sent soon.
He also added: “Previously in 2021 (April 19), the NBR withdrew 4% advance tax on soybean oil and palm oil imports, but in the current situation, a bigger VAT waiver may be given and the way things are being discussed so far, the announcement of a withdrawal of 15% value-added tax (VAT) on cooking oil imports may come at any moment.”
“So far, the VAT department of the NBR has continued discussions with various stockholders,” the official disclosed.
Asked about the Commerce Ministry letter, the ongoing meeting and SRO NBR spokesperson Syed A Momen told media that: “NBR is working on the proposal from the Commerce Ministry. We will inform the media when the final decision is made.”
“You will also find the final announcement on the NBR website,” he added.
Meanwhile, the cooking oil market was volatile this week as it has been seen that soybean oil prices varied from one market to another; causing frustration and helplessness in the minds of the city dwellers.
Md Bacchu Mollah, a van driver who earns an average of Tk250 daily to feed his five-member family, told Dhaka Tribune: "If I want to buy half a litre of soybean oil, I will have to spend half of my daily income and compromise on other essentials.”
“I don't know how to put food on the table for my wife and children during Ramadan,” the 55 year old man also added.
It is to be mentioned that the government has decided to stop the sale of non-bottled soybean oil from June 1 to ensure that cooking oil is sold at fixed prices.
A similar decision has also been taken for non-bottled palm oil, sales of which will cease after December 31.
Regarding the matter, Abdullah general stores proprietor Md Abdullah said: “Last few weeks the companies had cut off oil supplies and because of this the prices are going up. Rumour has it that the mills or distributors are trying to increase the price by another round before Ramadan.”
Market participants say that soybean oil and palm oil prices have risen by 70% within just two years.
To compare the prices, the price of soybean oil in September 2020 was only Tk80 per litre and the maximum retail price of bottled soybean oil was Tk125, palm oil was Tk70 and five-litre bottled soybean oil was Tk 620.
However, on February 6, the Commerce Ministry decided to increase the price of oil by Tk8 per litre considering the concerns of traders. At that time the price of loose soybean was fixed at Tk143 per litre, bottled soybean at Tk168 per litre and bottled soybean at five-litre at Tk795. And the price of open palm oil was fixed at Tk133, but the government's announcement remained only on paper.
According to a market survey by Dhaka Tribune, prices of cooking oil have shot up and gone beyond the government's fixed rates at retail, and the consumers as always are paying the price.
On Wednesday, loose soybean oil was barely available in Dhaka's kitchen markets and a litre of loose soybean oil was going for Tk175 per litre, 22% higher than the government's fixed rate of Tk143.
Interestingly, the five-litre containers were selling for Tk830, still 4.4% higher than the government fixed rate of Tk795, and the per litre cost was about Tk10 cheaper than loose soybean oil.