Bangladesh Steel Mill Owners Concerned over the New VAT Law

The Bangladesh steel manufacturers on 13th May urged the government not to implement Value Added tax (VAT) of 15-20% on overall long steel products.

This hike in taxes will adversely affect the industry pushing up the prices rigorously and making imports viable for the products from Durgapur,India.

A re-roller based in Bangladesh who’s rebar production stands at 8,000-9,000 MT monthly stated “if the VAT is implemented it will create panic as the prices once shoot up above USD 90-95/MT, which will result in lull sales for domestic market making imports viable”.

The Bangladesh government is planning to ramp up the production so that they can meet country’s demand. Imposing the taxes will worsen the domestic sales making imports feasible, another source added.

In Joint Press Conference, the President of Bangladesh Auto Re-Rolling & Steel Mills Association (BARSMA), urged the Government to rethink on imposing VAT on Real Estate and Construction Goods (like Cement & steel) so that the infrastructure of the country can grow without any interruptions.

He also added that consequence of the VAT will discourage consumers not to purchase the product, thus reducing sales on the manufacturers’ level affecting the sectors’ growth.

In a statement, BARSMA Secretary also said, “Steel manufacturers now pay Tk 900 as VAT for each tonne of rod based on a tariff value system. But once the VAT and Supplementary Duty Act 2012 comes into force, price of each tonne rod will be increased by Tk 7,500 a tonne.”

Current offers for 10-12 mm rebar in Bangladesh are USD 550-560/MT (at Taka 45,000-47,000/MT) and in India, Eastern Region, Ex-Durgapur offers are at around USD 450-460/MT (All Taxes Excluded)