The National Board of Revenue (NBR) today eliminated all import taxes on sunflower and canola oils in a bid to encourage imports, boost the supply of edible oil and curb their soaring prices in the domestic market.

The decision comes two weeks after the Bangladesh Trade and Tariff Commission (BTTC) recommended the government reduce import taxes on sunflower oil and canola or rapeseed oil to offer a greater range of cooking oils in the markets.

The tax administration said the tax benefit for import of these types of oils will be valid until March 31 next year.

The cut in tariffs will reduce the import cost of these oils by Tk 40-Tk 50 a litre, the NBR said in a press release today.

Bangladesh's consumers, already grappling with persistent inflation, have seen cooking oil prices rise over the past three months.

This increase has been driven by higher international prices and supply concerns resulting from reduced palm oil production in Malaysia and Indonesia, the world's two largest producers of palm oil, which are increasingly focusing on using it for biodiesel.

Bangladesh depends largely on import to meet its domestic demand of approximately 23 lakh tonnes of edible oil a year.

On Sunday, the average price of unpackaged palm oil was Tk 156.5 per litre, up 23 percent year-on-year, according to market price data compiled by the Trading Corporation of Bangladesh.

Prices of soybean oil rose too with packaged soybean oil becoming scarce in the retails amid supply shortage.

Against backdrop, the BTTC last week recommended that the government impose a 25 percent regulatory duty on the export of crude and refined rice bran oil to increase domestic supply.

Today, the NBR said it also slashed value added tax (VAT) on the import of sunflower and canola oils to 5 percent likewise the 5 VAT rate to bring palm and soybean oil from the international market.

Before lifting the import tariff, crude sunflower oil importers were required to pay a total of 31 percent of their purchase price in duties and taxes while for the refined version it was 32 percent. 

For raw canola oil, total import duty and taxes were 37 percent while for the refined version it was 58 percent, the BTTC said in its report sent to the commerce ministry and the NBR earlier.