Tuesday, 05 Jul, 2022

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Local bitumen industry suffers from tax discrimination

Staff Correspondent | banglanews24.com
Update: 2022-02-08 21:51:38
Local bitumen industry suffers from tax discrimination

The production and marketing of bitumen is facing discrimination in taxation structure despite the government’s vision to promote home-grown industries.

Despite being an important material for road and highway construction, the local bitumen industry is deprived of policy support, unlike other local industries.

Entrepreneurs said local bitumen production is burdened by up to 26 per cent tax on top of 15 percent duty for importing raw materials.

However, there is no tax on bitumen import.

There is only 5 percent VAT on the retail price of finished imported products, which is 15 percent for the locally produced bitumen. Such tax structure is not favourable for flourishing the local industries.

Accident Research Institute former Director Prof Mizanur Rahman said the government should provide policy support to the local production of bitumen like other industries.

“None local industries including bitumen sector can’t survive with such unfair competition in the market,” Prof Mizan, a faculty at civil engineering department at Bangladesh University of Engineering and Technology (BUET), said.

Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) President Md Jashim Uddin said the trade body never wants any discriminatory tax structure for any industry.

“As there is no VAT on finished product, the 15 percent duty on raw material import for local production is illogical and an injustice. Besides, additional 15 percent VAT at the distribution level is unexpected,” the FBCCI president said, urging the government to formulate a logical tax structure for the local bitumen industry.

BUET Prof Khan Mahmud Amanat said the government should promote local products for the sake of the country’s economy.

“Unless the government formulates policy to discourage import of finished bitumen, there will be opportunities for the importers,” Prof Khan said.

A former senior member of the National Board of Revenue (NBR) termed the tax structure for bitumen as contradictory to the efforts for the protection of local industries.

“If the tax on local production is higher than the imported products, the policy will not serve the interest of local industries. The discriminatory structure should be reformed,” Md Farid Uddin, a former senior member of NBR, said.

A syndicate of businesses imports sub-standard bitumen from some countries of the Middle East in absence of prudent policy and supervision, according to sources familiar with the port management issues.

Promoting the imported finished product, a group of organizations and contractor agencies use sub-standard bitumen in road construction. The government and people are counting the losses for the use of sub-standard bitumen.

BUET Prof Hasib Mohammed Ahsan said the local production of bitumen will create opportunities for the local practitioners to conduct high-end research and development in the area of civil engineering.

At present, the annual demand for bitumen in the country is nearly 550,000 tonnes. The demand is growing over the years. The raw materials of bitumen are petroleum oils and oils obtained minerals, crude.

The local producers of bitumen have to pay a total of 26 percent tax for importing raw materials.

It includes 5 percent import duty, 15 percent VAT, 3 percent advance tax and 2 percent advance income tax. The price of a single barrel of raw material is $40.

The scenario is different for the imported finished bitumen. The import duty for bitumen is Tk 4,500 per tonne excluding 2 percent advance income tax (AIT) and 5 percent advance tax (AT).

For importing the product in bulk amount, the businesses avail special facilities with Tk 3,500 import duty per tonne and 2 percent AIT and 3 percent AT.

In this situation, the local bitumen producers are seeking a waver of 15 percent VAT and 5 percent duty on raw material import. They said the local producers have the capacity to export bitumen.

Many countries including neighbouring India have imposed various tariffs and other taxes on finished goods in the interest of local industries. Besides, the local companies avail relaxed tax support on raw material import.

BDST: 2150 HRS, FEB 08, 2022
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