The finance ministry has approved the commerce ministry’s proposal to collect value-added tax on edible oil at only one stage of supply chain of the product to reduce hassle businesses face in paying VAT at different stages, officials said. The facility may be given for one and a half years upto June 2016, they said. Officials said that finance minister Abul Maal Abdul Muhith had recently instructed the National Board of Revenue to take steps to amend the existing statutory regulatory order to facilitate the single-stage VAT payment by businesses.
The VAT rate, however, will remain unchanged at 15 per cent and VAT will be payable at only import stage, they added.
Currently, VAT is applicable at three stages — import, production and distribution or trading.
NBR officials said that the benefit of paying VAT on vegetable oil mainly soya bean and palm oil by traders at the import level would be withdrawn after the implementation of the new VAT and supplementary duty act which is supposed to be effective from July 2016.
They said that the ministry took the decision following a strong recommendation of the commerce ministry in line with a demand of vegetable oil importers and traders though the revenue board was against the proposal.
The commerce ministry requested the finance ministry to introduce the system keeping the VAT rate unchanged to reduce hassle businesses face in paying VAT the three stages.
Edible oil importers, refiners and traders alleged that multi-level VAT collection system caused hassles for them due to frequent interruption of VAT officials at production, transportation and distribution points.
‘The VAT wing of the NBR is now taking preparation to amend the existing SRO,’ a senior official of the revenue board said.
Currently, 10 per cent VAT is applicable on edible oil at import stage, 15 per cent VAT on specific tariff value of the product at production and supply stages and 4 per cent VAT at trading or distribution stage, he said.
The fixed tariff value on which VAT is collected at the production stage is Tk 4,110 for a tonne of refined edible oil and Tk 3,700 for a tonne of refined palm oil, he said adding that the aggregated VAT incidence at all stages was around 14.88 per cent.
Earlier, the revenue board, in a summery sent to the finance minister for his consideration, said that apparently, the system was easier for collection of VAT for the revenue officials and cost effective for businesses, but practically it would not be favourable in revenue perspective.
Introducing a single-stage VAT at the rate of 15 per cent will not affect the overall revenue collection but it may disrupt the standard of VAT system at supply chain, it said.
The system will also eliminate the monitoring mechanism of the VAT administration at production and supply stages of this essential product which is important for ensuring VAT collection, he added.
-With New Age input
