NBR slashes taxes on MS products, cement sheet

FT ONLINE

The National Board of Revenue (NBR) has reduced taxes on mild steel (MS) products, cement sheets, bidi and some other raw materials for the steel sector.

Officials said the revenue board has slashed taxes at the request of industry insiders to make the prices of these products affordable in the local market.

However, tax on bidi has been cut because of pressure from the lawmakers.

The NBR cut specific VAT at the trading stage of MS products to Tk 500 per tonne from the previous Tk 1,000 per tonne.

It also reduced VAT on the production of cement sheets to 5.0 percent and credit rating agency service to 7.5 percent from the previous 15 percent.

Supplementary Duty (SD) on bidi has been cut by 5.0 percent to 30 percent from 35 percent.

Sources said it is a 'contradictory' move against the government's vision to build a tobacco-free country by 2040.

The VAT wing of NBR issued three separate Statutory Regulatory Orders (SROs) on Sunday, making reduced tax rates effective.

Considering the negative impacts on the steel and construction industry, the board has reduced specific tax on MS products and some raw materials for the steel sector.

In the proposed budget, the government had fixed a specific tax on MS products at Tk 2,000 per tonne. Later in the Finance Act-2019 passed on June 30, the government cut it to Tk 1,000 per tonne.

Officials said the NBR reduced VAT once again to Tk 500 at the request of industry insiders to keep the prices of these products low in the local market. Reduced tax benefit has been offered for sales of MS rod, billet, ingot and other products in the domestic market.

Steelmakers have long been demanding a cut in VAT on steel products. The VAT wing also reduced taxes on the production of ferromanganese, Ferro-silico-manganese alloy and ferrosilicon alloy, and raw materials for the steel industry, It has imposed a specific tax on those materials, instead of 5.0 percent VAT, to reduce tax incidence on those raw materials.

As per the SRO, specific VAT will be payable at Tk 1,000 per tonne of ferromanganese and Ferro-silico-manganese alloy and Tk 1,200 per tonne of ferrosilicon alloy.

SD on bidi, produced manually, has been reduced to 30 percent from the previous 35 percent. Officials said lobbying by a group of parliament members and pressure from bidi manufacturers has forced them to cut SD on health hazardous product.

During the budget preparation stage and after the budget, more than 50 parliamentarians sent demi-official letters to the revenue board for not increasing the tax on bidi.

In the budget for the current fiscal year, the government had increased SD on bidi to 35 percent from 30 percent.

Sources said the lawmakers consider bidi workers as their vote bank in the rural areas and intend to protect them. The bidi industry insiders also lobby by furnishing false statistics on bidi workers.

VAT officials said revenue collection from the tobacco sector has dropped drastically in the first two months of the current fiscal year.

Such a reduction in taxes would trigger shortfall in the revenue collection target for this FY, they added.