The Energy and Mineral Resources Division has asked the National Board of Revenue to fix value-added tax on imported liquefied petroleum gas at 10 percent, scrapping the existing 15 percent exemption, as it moves to address an acute supply crunch.

In a letter sent to the NBR Chairman today, the division also proposed waiving the 7.5 percent VAT on domestically produced LPG along with other business-stage taxes.

Private operators meet about 98 percent of Bangladesh’s LPG demand through imports, most of which is consumed by industry and households. Supplies typically tighten in winter as global prices rise and pipeline natural gas becomes scarcer, pushing more users towards bottled gas.

The proposal followed a meeting with the LPG Operators Association of Bangladesh (LOAB), which had sought a review of the tax structure. After the meeting, the association’s members pressed for zero percent VAT at the import stage, going beyond the proposed 10 percent rate.

The recommendation echoes a discussion held by the advisory council on December 18 last year. Minutes of the meeting described the proposal by the Internal Resources Division to withdraw the 15 percent VAT exemption at the LPG import stage and instead impose 10 percent VAT, while granting exemptions on the 7.5 percent VAT levied at the local production stage, the VAT at the business level, and advance tax as “timely”. However, it called for a joint assessment by relevant ministries to determine how much prices would fall for consumers before implementation.

Following the discussion in the advisory council, the decision was presented at a meeting with LOAB leaders. The letter notes that the LPG operators, though proposing zero percent VAT at the import stage, agreed with the advisory council’s discussion.

The energy division has now asked the NBR chairman to take the necessary steps in line with the advisory council’s discussion and prevailing market conditions, on the grounds that LPG should be treated as a “green fuel”.