The Ministry of Power, Energy and Mineral Resources has recommended cutting value-added tax (VAT) on liquefied petroleum gas (LPG) imports to below 10 per cent by reinstating a 15 per cent VAT exemption at the import stage.
"To maintain normal supply of LP gas in the market, the advisory council agreed to reinstate the 15 per cent VAT exemption at the import stage and imposing VAT below 10 per cent and providing exemption from the 7.5 per cent VAT imposed at the local production stage at a meeting," said a ministry letter issued on Thursday.
The Ministry of Power, Energy and Mineral Resources sent the letter to the National Board of Revenue (NBR) to take necessary measures in this regard.
Recently, the LPG price reached a volatile situation in the country, so the government took initiatives to re-fix VAT and tax at the import and local production levels. At the same time, initiatives were also taken to simplify the process of opening bank loans and LCs (letters of credit) for importing LPG, the letter said.
The ministry requested the NBR to take necessary measures to restructure the tax considering LPG as a 'green fuel' in view of the current situation.
The letter said that about 98 per cent of the total LPG used in the country was imported by the private sector. The demand for LPG increases in the winter season, But LPG supply significantly decreases in the international market as well as locally.
Earlier, the Advisory Council meeting was held on 18 December and discussed the energy division’s issue.
The letter also said that the proposal to withdraw the 15 per cent VAT exemption at the import stage of LPG and impose 10 per cent VAT and to exempt the existing 7.5 per cent VAT, VAT and advance tax at the local production stage is timely.
However, before implementing this decision, it was emphasised that a detailed analysis should be conducted on how much the price of LPG will decrease at the consumer level.
For this reason, the energy division, the commerce ministry and the internal resources division were instructed to conduct a coordinated review.
However, the LOAB members demanded zero per cent VAT on the import stage instead of the proposed 10 per cent VAT, said the letter.
.jpg "LPG cylinder price reduced to Tk1,885 in Bangladesh")