NBR to review duty on rice, onion for addressing price volatility

January 06, 2021 08:20:27

| Updated:

January 06, 2021 12:58:49

The National Board of Revenue (NBR) is in the process of reviewing the import duties and taxes on rice and onion to rationalise their prices in the domestic market, according to the officials.

It is likely to reinstate 5.0 per cent duty and levy a new regulatory duty (RD) onion to discourage the import of the item to help the onion growers better price.

The NBR might reduce duty on rice import by issuing a Statutory Regulatory Order (SRO). The review comes in response to separate proposals made by the ministries of food and commerce and trade bodies concerned.

The Board, however, is unlikely to bring down the duty on edible oil as proposed by the commerce ministry. It has rather maintained that the tax-load of edible oil might see some reduction if advance value added tax (VAT) collected at the single-point instead of multiple points of import, marketing, and sales of the item. Such a measure could be implemented in the budget for the next financial year, the NBR said in a note.

Officials said that the Board on Tuesday sent the relevant SROs to the law ministry for vetting.

As per the customs act, the NBR cannot increase customs duty without approval by the parliament.

A senior official of the board, however, said there is no barrier in the law to impose the RD on import of any item.

On Monday, the commerce minister hinted at reinstating the duty on import of onion following the fall in prices of the item in the local market.

Earlier, on December 27 last year, the food ministry also had said it would request the authorities concerned to reduce the total tax incidence on import of rice.

However, the NBR is yet to issue any SRO in these regards.

The prices of the local onion started to decline sharply after India lifted its export ban recently after three and half months. India had imposed a sudden ban on export of onion on September 14, 2020.

Currently, the import duty on rice is 62.5 per cent. There has been a surge in the prices of the staple in the recent months.

The NBR officials said there is 25 per cent customs duty on the major item which might be lowered through issuing a gazette.

On the other hand, tariff commission under the ministry of commerce has proposed to collect taxes on edible oil at the import stage rather than three stages to mitigate hassles of the dealers and retailers.

Currently, tax is collected at import, marketing and distribution stages of edible oil.

Meanwhile, the prices of edible oil started surging in the local market following increase of its price in the international market.

Talking to the FE, Biswajit Shaha, director (corporate and regulatory affairs) of City Group, said the prices of the item is US$ 1,180 per tonne in the international market as the main source countries — the US, Brazil and Argentina — are hit hard by the Covid-19 pandemic.

“We want to pay the tax at one stage,” he said.

The edible oil dealers and distributors are not able to maintain records of payment of VAT, facing questions by the VAT officials, he added.

It is difficult to claim rebate on the paid tax due to non-availability of records, he said.

The importers are ready to take the liability of VAT payment at import stage if it is collected at one stage, he added.

On Tuesday, bottled edible oil was selling at Tk 120-130 per litre while the coarse rice at Tk 50 to Tk 60 per Kg and fine rice at Tk 65 to Tk 72 per KG.

The local onion was selling at Tk 40-50 per kg while imported ones Tk 25-35 per Kg.

Talking to the FE on Tuesday, Ghulam Rahman, president of the Consumers Association of Bangladesh (CAB), said the prices of such essential items should be made tax-free for the sake of consumers.

He said the government should limit the onion price between Tk 25 and Tk 30 per kg round the year.

Mr Rahman hailed the decision to reinstate the tax on onion import for ensuring fair prices for the farmers. He, however, suggested lifting the import taxes on onion with the end of harvesting season.

In case of edible oil, he said, the rate of VAT should not exceed beyond 15 per cent so it can be collected at one-stage instead of three stages.

NBR officials said they revise the duty structures for the sake of consumers but the benefit hardly passes on to the consumers.

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