Commerce minister urges NBR to reduce VAT on sugar imports

In the wake of rising prices of unrefined sugar in the international market, Commerce Minister Tipu Munshi has requested the National Board of Revenue (NBR) to reduce or withdraw VAT on sugar imports to keep prices stable in the domestic market.

In a recent letter to the NBR, he described the overall state of the domestic and international sugar markets, requesting the revenue board to consider the plight of the common people.

The NBR is considering the request, said sources.

The minister's letter said that a year ago, the C&F price of a tonne of unrefined sugar in the international market was $350-360 and the current price is $480-490. If sugar is imported at this price and refined here, its local retail price would be around Tk75 per kg, too high for many in Bangladesh.

According to NBR sources, at present, on every tonne of sugar imported, there is a fixed duty of Tk3,000 as well as a 15% VAT, a 30% regulatory duty, and a 5% advance income tax.

Currently, Trading Corporation of Bangladesh (TCB) outlets sell unpacked sugar for Tk70-72 per kg. Packaged sugar is sold for Tk78 per kilo at retail in non-government stores.

According to the TCB, sugar prices have gone up by close to 15%  in one month.

Buyers had to pay about 25% more for sugar in 2020 than they did in 2019, according to the Consumers Association of Bangladesh (CAB).

Sugar refinery sources say they buy a kg of unrefined sugar for Tk27 on the international market and the refining or production cost is another Tk10.

"But we have to sell sugar for at least Tk65 per kg at the mill gate since the government takes Tk28 in fixed duties, VAT, regulatory duty and advance income tax, over and above our total purchase and production cost of Tk38 per kilo," said sugar mill officials.

Clearly the price of cheap sugar is high due to the large number and amount of government taxes imposed, burdening consumers with a high price on one of the most needed daily essentials.

City Group Director Biswajit Saha told The Business Standard, "The price of sugar would come down if the government reduces taxes and VAT on sugar. Then the price rise in the international market will not destabilize the domestic market."

In his letter, Tipu Munshi said that due to the increased sugar prices in the international market, retail prices in the domestic sugar impose undue economic pressure on the daily life of the average consumer.

It would be possible to keep the sugar market stable if tariffs on unrefined sugar imports are withdrawn or reduced, or VAT is withdrawn, the commerce minister said in the letter.

He requested the withdrawal of tariff or VAT given the current, high  international market price of sugar.

According to the commerce ministry, the country has a demand of 1.4 million tons of sugar per year and about 90% of domestic demand is met through imports.

Members of the Bangladesh Sugar Refiners Association import unrefined sugar from abroad and sell it in the domestic market after refining in their factories.