26/12/2014 (Daily Star) - The National Board of Revenue is set to simplify taxation for soybean and palm oil processors by allowing them to pay value-added tax at one stage instead of three.

Once the plan, which is in line with a commerce ministry suggestion, comes into being, the cooking oil processors will pay 15 percent VAT at the import level only, an NBR official said, asking not to be named.

The commerce ministry put forward the suggestion as the processors said the existing system causes hassles.

Currently, there is no import duty for crude soybean or palm oil. The processors have to pay 10 percent VAT at the time of import, mainly from Indonesia, Malaysia, Brazil and Argentina.

Private sector processors import nearly 15 lakh tonnes of palm and soybean oil a year to feed the domestic market that requires 18 lakh tonnes. The rest of the demand is met through locally-grown mustard and rice bran oil, according to processors.

After paying a portion of the 15 percent VAT at the import level, the processors have to pay Tk 4,110 and Tk 3,700 for each tonne of soybean and palm oil, respectively, at the refining stage.

They have to pay around 4 percent VAT at the dealer's level.

"Hassles will ease if we are allowed to pay VAT only at the import level," said an official of a cooking oil processor and marketer.

But he said the adjustment may cause a spike in prices at the retail level because most of the dealers and traders usually do not pay the 4 percent VAT at dealer's stage.

However, the tax authority said the move may distort supply chain and reduce scope for monitoring.

The exemption may remain effective until June 2016, insiders said.