Bangladesh National Board of Revenue to increase soft drinks taxes by 10% to combat abuse of existing tax benefit by some energy drink producers

Nevin Barich

BANGLADESH , April 17, 2014 (Financial Express) – The National Board of Revenue (NBR) has moved to hike taxes on soft drinks by 10 per cent to check abuse of the existing tax benefit by some energy drink producers.

The Value Added Tax (VAT) wing of the NBR has decided to increase supplementary duty (SD) to 25 per cent from existing 15 per cent on all types of soft drinks.

The board is set to issue a Statutory Regulatory Order (SRO) by next week to give effect to the tax hike at production-stage of soft drinks.

Tax officials say that many of the energy drink producers are enjoying reduced tax rate by claiming their beverages as soft drinks.

Currently, SD on energy drink is 25 per cent while it is 15 per cent on soft drinks.

Such a gap in taxes prompts some companies to furnish false declaration of their energy drinks as soft drinks.

A senior NBR official said the tax on soft drinks will be increased to make the tax rates uniform with the energy drinks.

He said the government will be able to earn Tk 200 million in taxes in the last two months of the current fiscal year (May-June) with the tax hike.

"The NBR in February last issued a guideline on energy drinks by specifying its raw materials. But, it has created confusions among the stakeholders and tax offices as many of the ingredients of soft drinks are similar to those," he said.

The NBR has moved to make the uniform tax structure for both energy drinks and soft drinks to avoid the confusions in respect of nature of the drinks, he added.

A senior VAT official said as per the guideline the taxmen have to carry out chemical tests of energy drinks to check ingredients, which is a troublesome and time-consuming job.

Guidelines to differentiate energy drinks from soft drinks have also sparked confusions on the part of NBR authority to define the ingredients bypassing the testing agency, he added.

After issuance of the SRO on uniform tax rates for both the categories, the confusions will be removed, he said.

With the upward revision, the prices of soft drinks are likely to be increased by Tk 11.5 per litre. However, tax on juices and other fruit drinks will remain unchanged.

Talking to the FE, Director (Marketing) of Pran-RFL Group, Kamruzzaman Kamal, said they are yet to know about the move to increase taxes on soft drinks.

Food and beverage companies including MM Ispahani, Global Beverage Company Limited, Pran, Transcom, Partex, Akij Food and Beverage, Tabani beverage have varieties of carbonated soft drinks in different brand names. Published by HT Syndication with permission from The Financial Express. For any query with respect to this article or any other content requirement, please contact Editor at htsyndication@hindustantimes.com

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