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As rice prices hit intolerable levels due to supply shortages driven by floods, political unrest, and a change in government, the National Board of Revenue (NBR) has decided to withdraw all duties and taxes on rice imports, retaining only a 2 per cent advance income tax.
Eleven days ago, the revenue board issued a notification with significant duty reductions, but the move drew lukewarm response from businesses
As a result, the Bangladesh Trade and Tariff Commission (BTTC) recommended the complete removal of all duties on rice imports.
In response, the NBR took the latest measure which has now been sent to the Ministry of Law for vetting.
The measure aims to increase rice supply in the market and bring prices to a more manageable level, according to an NBR official, who also said the official notification would be issued shortly.
Currently, the cumulative import duty on rice stands at 62.5 per cent, consisting of 25 per cent customs duty, 25 per cent regulatory duty, 5 per cent advance income tax, and 5 per cent advance tax.
Effective Oct 20, the NBR reduced import duty on rice from 25 per cent to 15 per cent and regulatory duty from 25 per cent to 5 per cent, and waived the 5 per cent advance tax entirely.
Now, only 15 per cent import duty, 5 per cent regulatory duty, and 5 per cent advance income tax remain on rice imports, with the new decision retaining only the 2 per cent advance income tax.
Earlier, the NBR estimated that import costs for rice would decrease by Tk 14.40 per kg with the revised duties.
However, with no significant imports, the anticipated impact has not been felt in the market.
Rice prices have remained high for two months, with an increase of Tk 5 to Tk 6 per kg over the past month across all types.
IMPORT RESPONSE TO DUTY WAIVERS
According to Bangladesh Bank data, a letter of credit (LC) was opened on October 27 for importing 26 tonnes of rice from Vietnam following the duty reduction.
The Tariff Commission has raised concerns that such limited LC openings may not meet the increased demand for rice, posing a potential risk to the market.
Between July 1 and October 29 of FY 2024-25, a total of 1,957 tonnes of rice was imported, according to NBR data.
This compares to 934.18 tonnes in FY 2023-24, 1,237,168 tonnes in FY 2022-23, and 48 tonnes in FY 2021-22.
To boost private rice imports, the food ministry requested NBR to reduce duties at the end of September.
Writing to the NBR, it highlighted a target of procuring 500,000 tonnes of paddy and 1.47 million tonnes of rice for this year’s Boro season to strengthen food stocks and support farmers. As of Aug 31, 296,970 tonnes of paddy and over 1.26 million tonnes of rice had been collected.
Presently, government food reserves stand at over 1.75 million tonnes, comprising 1.26 million tonnes of rice and 463,928 tonnes of wheat.
The food ministry warned that rice prices might rise after the Aman harvest due to recent floods across fourteen districts, which severely damaged Aush, transplanted Aman, and Aman seedbeds.
In prior efforts to stabilise prices, the NBR had also waived duties on imports of edible oil, sugar, and eggs to control supply and prices.