The Commerce Ministry has asked the National Board of Revenue (NBR) to cut all kinds of duty, tax and tariff value on sunflower, olive and canola oil at the import stage, to reduce dependency on soybean and palm oil.
The move has also been taken to rein in the possible spiraling prices of soybean and palm oil and also to help bring the cost down for consumers, said sources.
On Tuesday, the Commerce Ministry made the request to the revenue board to withdraw all taxes, duties and tariff values on imports of such cooking oil - both refined and crude sun flower oil, olive oil (bulk), olive oil rape seed/can (up to 2.5 kg), rape seed/canola oil - following a recent decision at the third meeting of the taskforce committee on essential items.
Currently, the import of edible oil, other than soybean and palm, is subject to high duties and taxes along with minimum tariff value.
Rapeseed or canola oil (low uric acid) is popular edible oil worldwide and that is subject to paying a total of 37% duty.
The import of refined sunflower oil is required to pay 32% tax, including 10% customs duty (CD), 15% VAT, 5% advance tax (AT) and a tariff value $1.6 per kilogram.
The total duties and taxes on imported crude sunflower oil come to 31%.
Earlier, Bangladesh Trade and Tariff Commission (BTTC) proposed bringing down its total tax incidence to 20% for both refined and crude sunflower oils.
The BTTC proposal says sunflower, refined olive and canola oil have less saturated fat and are often prescribed by physicians for health issues.
Most of the country's oil refineries refine palm and soybean crude.
There is no import-tax benefit for refined soybean and palm oil.
A number of supplier countries of soybean have increased export duty on crude soybean oil following supply shortage.
Currently, total tax incidence on refined and crude olive oil is 37%, and olive oil wrapped or canned 58.60%, BTTC data showed.
The BTTC recommended bringing it down to 25% and 31% respectively.
Sunflower, olive and canola oil are expensive in Bangladesh because of higher duty, tax and tariff value - those items are usually consumed by the affluent section of society.
The BTTC also recommended rationalizing the import duties on expensive edible oil in line with the exemptions offered to soybean and palm oil, as a fiscal solution to the market overheating.
In an official correspondence to the Ministry of Commerce, the BTTC proposed cuts in duties and taxes on sunflower, olive, and canola oil for fiscal year 2022-23.
The BTTC believed that a cut in dependence is necessary due to the volatile price situation of soybean and palm oil on the international market and resultant high rates at home.
In its letter to the Commerce Ministry, the BTTC said higher duties and taxes on sunflower, olive and canola had been discouraging their imports.
Only 1,600 tonnes of other types of cooking oil were imported in 2019-20 paying Tk8.85 crore in taxes.
The annual oil consumption is estimated at 2.5 million tonnes.
The major share of cooking oil consumption is taken by soybean and palm oil.
Around 95% of the local demand for cooking oil is met through imports.
In March last, the NBR cut taxes on soybean oil and palm oil to 5%, waiving its 15% VAT on oil refining, 5% at trading stage and 15% at import stage.