Govt decides to roll back VAT on imported sugar

VAT

Jehangir Hussain

The government has decided to roll back Value Added Tax (VAT) on imported sugar.

But traders said that this decision will not affect the price of sugar immediately, claiming that the National Board of Revenue (NBR) had been already collected VAT on sugar in the market.

The result of this decision will not be visible in the market until new sugar shipments arrive, they said.

Traders said that the government's decision will reduce the price of sugar by only Tk 5 per kg.

NBR has reduced the import levy by five per cent to reduce volatility in the sugar market ahead of the holy month of Ramadan, said sources.

The NBR has withdrawn import duty by Tk 3,000 per tonne of unrefined sugar and by Tk 6,000 on refined sugar.

The NBR has reduced this duty on request from the  Commerce Ministry.

Traders say that the price of sugar may be reduced  by Tk 5 to Tk 5.5 per kg when the reduced duty become effective.

Even then sugar  price per kg will be above Tk 100.

The country’s sugar market has been volatile in recent months due to its shortage caused by controlled supply.

Packaged sugar is less available.

For this following the Commerce Ministry’s  requested made in January, the NBR reduced duty on sugar imports to normalise the market.

On Sunday, NBR reduced duty on sugar import from 30 per cent to 25 per cent through a notification.

And the import duty of Tk 3,000 per tonne of unrefined sugar and Tk 6,000 on refined sugar were withdrawn.

This will be valid till May 30.

According to Monday’s price list of Trading Corporation of Bangladesh (TCB), sugar was sold at Tk 110 to Tk 120 per kg in Dhaka, up from Tk 75 to Tk 80 a year ago.

The market shows that sugar price increased by 50 per cent in one year.

Secretary General of Sugar Refiners Association Golam Rahman said that sugar price could be reduced by Tk 5 per kg.

He also said that there are a few sugar-laden ships were on their way to Bangladesh.

These shipments will get duty free entry, he said, adding, to make a positive impact on the market.

But there must be supervision in retail and wholesale markets.

City group Director (Corporate and Regulatory Affairs) Biswajit Saha said that due to duty exemption, per kg of sugar can be reduced by up to Tk 5.

A few ships laden with sugar will come ahead of Ramzan.

He said that it was expected that the price of sugar will slightly fall before Ramzan.

Due to the dollar and energy crisis created by  Russia-Ukraine war, the country’s sugar market became volatile since July 2022.

Though the government fixed the price of sugar for the first time in September 2022 after its price was increased more than thrice, sugar crisis in the market did not end.

Packaged white sugar disappeared from the market and red sugar in packets costs Tk 150 per kg.

Despite fall in sugar price in the global market, its price at Khatunganj wholesale market has increased again.

In a span of two weeks, sugar price at the wholesale market increased by up to Tk 150 per maund (37.32 kg).

Traders said that although the price of sugar in the international market has been on the rise for a few days, it is now falling.

But the importers manipulated and increased its  price for which sugar price has increased by up to about Tk 400 per maund in last one and a half months.

However, the importers claimed that products booked at low prices in the international market have not yet arrived in Bangladesh.

It takes more than two-and-a-half months to bring raw sugar from the international market after refining it.

As a result, sugar price in the domestic market has not yet decreased.

According to the Sugar Refiners’ Association, the sugar refineries availed loans with late payment. In case of late payment due to the current economic situation, additional payments were made against the dollar; As a result, the companies have to count huge losses.

The association said import duty has increased from Tk 22,000 to Tk 23,000 per tonne of sugar, to Tk 28,000 to Tk 29,000.

Mills owners say that the price of sugar has been rising continuously for several months due to the rise in the price of dollar. Now there is a supply crunch as fewer letters of credit (LCs) were opened.

Retailer complained that though mill owners increased the price of sugar from Tk 95 to Tk 108, it’s not available as per demand.

Mamun Hossain, owner of the Lakshmipur General Store at Karwan Bazar in the capital, told the Daily Observer that he was selling loose sugar at Tk 120 per kg.

He said sugar packed by Fresh company costs more.

Anis Rahman, salesman at Ma General Store at Karwan Bazar said that red sugar was being sold for Tk 150 per kg and white sugar  for Tk 102 per kg.

During visits to kitchen markets in the capital this correspondent found that the government fixed loose sugar price at Tk 102 per kg and packaged sugar price at Tk 107 per kg.

Still sugar is not available in most places.

Even if it is available somewhere, consumers have to pay Tk 110 to Tk 115 per kg.

Loose sugar is also being sold at similar prices. But red sugar costs more.

Packaged sugar costs  Tk 130 to Tk 140 per kg.

jehangirh01@gmail.com