Importers have warned that the imposition of a flat duty on all grades of lubricants will throw a wrench into the business and hit the agriculture and transport sectors hard. The interim administration has imposed a uniform specific duty of Tk 39,000 per tonne, however the categories of lubricants in the current budget. The National Board of Revenue officials argue that the specific duty is designed to stop ‘massive tax evasion’ by a few importers through undervaluation of prices. “It may be true that some importers undervalued the prices to evade tax, but the duty structure must be rational,” says Faisal Mahbub, president of Oil and Lubricants Importers Association of Bangladesh (OLIAB).
Importers have warned that the imposition of a flat duty on all grades of lubricants will throw a wrench into the business and hit agriculture and transport sectors hard.
The interim administration has imposed a uniform specific duty of Tk 39,000 per tonne, however the categories of lubricants in the current budget.
The National Board of Revenue officials argue that the specific duty is designed to stop ‘massive tax evasion’ by a few importers through undervaluation of prices.
“It may be true that some importers undervalued the prices to evade tax, but the duty structure must be rational,” says Faisal Mahbub, president of Oil and Lubricants Importers Association of Bangladesh (OLIAB).
Mahbub maintains the value-addition determined by the NBR to convert base oil to lubricants is unrealistic and it has pushed up the duty.
Base oil is an intermediary product to produce finished lubricants for engines. Value-addition in base oil is around 15 percent, but the NBR has determined it at 38 percent, he says.
The previous duty rate was 52 percent, including 25 percent customs duty, 15 percent VAT, 4 percent infrastructure development surcharge and 3 percent advanced income tax.
The minimum value of imported mono grade lubricants is $600 to $650 per tonne, according to the association. But NBR officials quoting international market prices said it is no less than $850.
“We’ve fixed the flat duty rate on the basis of the previous duty structure,” a senior NBR official tells bdnews24.com, asking not to be named.
More than 100 grades of lubricants are manufactured broadly under the mono grade, multi grade, synthetic, industrial and marine, according to the association.
Mono grade, used in irrigation pumps, tractors, trucks and country boats, constitutes 70 percent of Bangladesh’s total lubricants import.
The tax incidence for mono grade lubricants has jumped up to Tk 39,000 a tonne from around Tk 20, 000, Mahbub says.
“This surge in duty will cost the agriculture and transport sectors heavily.”
Mahbub says the duty structure should not be flat as the price of various grades of lubricants varies between Tk 1 lakh to Tk 6 lakh.
According to NBR statistics, Bangladesh has imported 21,471.79 tonnes of finished lubricants worth Tk 179 crore in the first 11 months of the just concluded 2006-07 fiscal year.
Base oil import for the same period was 38,188.84 tonnes worth Tk 225.73 crore.
