Duty evasion in refined sugar imports feared thru under-invoicing

A clique of importers of refined sugar are allegedly evading customs duty through under-invoicing and thus depriving the government of revenues.  

Stakeholders say the price of refined sugar in the international market is about $100 per tonne higher than raw sugar.

However, it has come to light that in several consignments of goods cleared through the Chattogram Custom House, the import price of refined sugar has been shown lower than raw sugar, they said.

The Bangladesh Sugar Refinery Association recently sent a letter to the chairman of the National Board of Revenue, highlighting the price difference between raw sugar and refined sugar in the global market.

According to the letter, raw sugar is priced at around $600-$650 per tonne, while refined sugar is valued at around $750 per tonne.

However, according to the letter, documents reveal that the import price of refined sugar is consistently listed at $450 to $500 per tonne. As a result, the traders in this sector are evading revenue through the practice of under voicing.

In the letter, the organisation urged the NBR to determine the duty of refined sugar by cross-referencing the price with international market prices.

A review of some consignments of refined sugar cleared recently by the Chattogram Custom House shows that their price was shown at $450 to $580 per tonne. Raw sugar's price was shown at $600 to $650 per tonne.

Several senior officials from unrefined sugar importers said that the cost of refining imported raw sugar is around $100 per tonne. As a result, the price of refined sugar could not be lower than that of raw sugar.

Aziz Chowdhury, head of commerce at Abdul Monem Ltd, a sugar importer, said the current import price of raw sugar from the international market is around $600 to $650 per tonne.

He said that importers in the refined sugar sector are engaging in duty evasion by under-invoicing and concealing the actual price of their imports.

Tarek Hasan, joint commissioner of the Chattogram Custom House, said that refined sugar is currently being taxed at a higher price compared to before. He emphasised the possibility that refined sugar imports with lower assessed values might have been made under old LCs (letter of credits).

Refined sugar importers have to pay a custom duty of Tk6,000 per tonne, a regulatory duty of 30%, a VAT of 15%, an advance tax of 5%, and an advance income tax of 5%.

In contrast, the import of raw sugar incurs a custom duty of Tk3,000 per tonne, a regulatory duty of 30%, a VAT of 15%, an advance tax of 5%, and an advance income tax of 2%.

According to the Bangladesh Sugar Refinery Association, Bangladesh's annual domestic sugar demand ranges from 20 lakh to 22 lakh tonnes. Local sugar mills produce around 30,000 to 35,000 tonnes of sugar, leaving the majority of the demand to be fulfilled by importing raw sugar and refining it within the country.

Raw sugar constitutes about 95% of the total imported sugar, sourced from countries like Brazil, India, Australia, the United Kingdom, and Malaysia.

The remaining 5% comprises refined sugar imports, primarily used by food and beverage companies, ice cream, dairy, and various other industries.