Amid high prices and a shortage of bottled soybean oil, the National Board of Revenue (NBR) yesterday exempted traders from value-added tax (VAT) on locally produced edible oils, including mustard, sunflower, rapeseed, canola, and rice bran oils, in a bid to stabilise the domestic market.

The NBR said it had removed VAT at the production stage of rapeseed oil, colza seed oil, and canola oil until June 30 this year. In the case of mustard oil, VAT on the production of the main oilseed crop in Bangladesh has also been eliminated. The NBR did not mention any expiry date for this benefit.

The move by the revenue authority comes at a time when the edible oil market is volatile, and bottled soybean oil became scarce in many stores and markets just before Ramadan, when demand for edible oil rises.

Shopkeepers and distributors had earlier said oil refineries were delivering less than the demand for the month, which caused a supply shortage.

After visiting Mohammadpur Town Hall kitchen market in Dhaka yesterday, Commerce Adviser Sk Bashir Uddin said the supply of soybean oil at the retail level would normalise within the next two days.

"There is no shortage of daily essentials now. However, the supply of soybean oil is slightly less, which cannot be denied, but I hope the situation will improve from today (yesterday)," he told reporters.

He said that while soybean oil was selling at a higher rate, palm oil was being sold at Tk 25 below the government-fixed price per litre.

"Palm oil accounts for 60 per cent of our total consumption. The price of edible oil in the market has both decreased and increased at the same time. I hope the price of soybean oil will also decline," he added.

Over the last month, the price of loose soybean oil rose by 6.84 percent to Tk 185-Tk 190 per litre in Dhaka, according to market price data compiled by the Trading Corporation of Bangladesh.

The NBR, in a statement yesterday, said the government had prioritised this matter in the public interest and had removed VAT at the production and trading stages of mustard, rice bran oil, sunflower, and other edible oils in response to requests from various groups.

"We have taken this initiative in order to stabilise the edible oil market and promote locally produced alternatives to soybean oil during the month of Ramadan," said Md Bodruzzaman Munshi, second secretary of the VAT Policy at the NBR.

"Through these steps, consumers will be able to purchase edible oils at lower prices," he said. "We cannot force anyone, but our aim is to encourage the use of domestically produced edible oils."

In addition, the NBR lifted VAT at the trading stage on a range of domestically produced essentials, including biscuits, salt, flour, semolina, chilli powder, both solid and powdered forms of coriander, turmeric, ginger, and pulse-based food grains.

The NBR also removed VAT on liquefied petroleum gas (LPG) and natural gas at the trading stage. However, it said importers who sell LPG directly to consumers will not qualify for the exemption.