Sends summary on the proposal to finance minister
The National Board of Revenue is against a commerce ministry proposal for collecting value-added tax on edible oil at only one stage of supply chain of the product instead of the existing multi-level VAT collection system, officials said. Apparently, the proposed system is easier for collection of VAT for the revenue officials and cost effective for businesses, but practically it will not be favourable in revenue perspective, they said.
Earlier, the finance ministry asked the revenue board to take steps regarding the proposal of the commerce ministry for introducing a single-stage VAT system for soya bean, palm and palm olein in line with a demand of vegetable oil importers and traders.
The commerce ministry said that the revenue board should introduce the system keeping the VAT rate unchanged.
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 stage.
The fixed tariff values on which VAT is collected at production stage are Tk 4,110 for a tonne of refined edible oil and Tk 3,700 for a tonne of refined palm oil, according to the NBR.
The aggregated VAT incidence at all stages is around 14.88 per cent, a VAT official said.
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, he said.
The system will also abolish the monitoring mechanism of VAT administration at production and supply stages of this essential product which is important for ensuring VAT collection, he added.
In this context, the revenue board has prepared a summery for the finance minister Abul Maal Abdul Muhith describing the details of the proposal, its impact if the proposal is accepted, a senior official of the revenue board told New Age.
In the summery, the NBR termed the decision of introducing a single -stage VAT collection system sensitive.
Such sensitive decision should come from the high-ups of the government, the summery stated.
Commerce ministry officials said that edible oil importers and traders had been demanding to allow them to pay taxes at only one stage of supply chain claiming that the multi-level VAT collection system causes hassles for them and increases the price of the product at local market.
They, however, did not specify in which stage the VAT would be collected.
-With New Age input
