The LPG Operators Association of Bangladesh (LOAB) has urged the government to restructure the VAT regime on liquefied petroleum gas (LPG) by exempting the existing 7.5 per cent VAT at the production stage and imposing a 10 percent VAT with zero per cent advance tax (AT) at the import stage.
In a letter sent to National Board of Revenue (NBR) Chairman on January 4, LOAB President Mohammed Amirul Haque placed the proposal, arguing that such a move would help ensure market stability and create a more favorable business environment for the LPG industry.
According to the letter, bottled LPG is currently subject to a 7.5 per cent VAT at the production stage. LOAB believes that shifting the VAT burden to the import stage would be more rational, as it would streamline tax administration without causing significant fluctuations in market prices.
The association noted that if a 10 per cent VAT is imposed at the import stage, there would be no scope to adjust advance tax paid at the production stage. Moreover, advance tax is a refundable duty, and the refund process is often time-consuming. As a result, exempting advance tax at the import stage would not only ease operational challenges for businesses but also lead to an increase in government revenue, the letter said.
Speaking to The Times of Bangladesh, LOAB President Mohammed Amirul Haque said that implementation of the proposed framework would help maintain stability in the LPG market, provide the industry with a more competitive and business-friendly environment, and improve overall revenue management.
In January 2025, the NBR issued an order fixing VAT on LPG production at 7.5 per cent, raising it from the previous rate of 5 per cent.
Meanwhile, NBR Second Secretary (VAT Act and Rules) Bodruzzaman Munshi told The Times of Bangladesh that the existing VAT rate on LPG at the import stage is currently 7.5 per cent. He added that the NBR has yet to make any decision regarding the proposal submitted by LOAB to the NBR chairman.
