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| MRP Based Goods |
What are MRP-based goods in Bangladesh?
In Bangladesh, "goods based on MRP" refers to products where the Value Added Tax (VAT) and potentially Supplementary Duty (SD) are calculated and included within the Maximum Retail Price (MRP) printed on the product packaging. This system is primarily applied to specific categories of goods, and the VAT/SD is typically payable by the manufacturer or producer at the first stage of supply.
Here's a breakdown of what this means:
Maximum Retail Price (MRP): This is the highest price at which a product can be legally sold to the end consumer. It is usually printed on the packaging by the manufacturer.
VAT and SD Included: For specific goods, the Maximum Retail Price (MRP) already includes the applicable Value Added Tax (VAT) – This typically includes the standard 15% VAT, though sometimes a lower rate applies, along with any Supplementary Duty (SD).
This means that when a consumer buys the product at the MRP, they are also paying the embedded tax.
First Stage Taxation: The responsibility for paying this VAT and SD generally lies with the manufacturer or the producer at the initial point of sale (first stage of supply). They calculate the tax based on their production cost and profit margin, and this is factored into the MRP.
No Additional VAT at Retail Level: When retailers sell these MRP-based goods to consumers at or below the MRP, they do not typically charge VAT on top of the MRP. The VAT has already been accounted for by the manufacturer.
Examples of goods that are often subject to VAT and SD on MRP in Bangladesh include:
Tobacco products: Cigarettes and other tobacco items usually have VAT and SD included in their MRP.
Alcoholic beverages: Similar to tobacco, alcoholic drinks typically have taxes embedded in their MRP.
Certain petroleum products: The pricing of some fuel types might include VAT and other duties within the displayed price.
Other notified products: The National Board of Revenue (NBR) can specify other goods where VAT and SD will be calculated on the MRP.
Key Points to Understand:
Transparency for Consumers: The MRP system aims to provide price transparency for consumers, as the final price they see includes all applicable taxes.
Simplified Collection: For the government, taxing at the manufacturing/first supply stage for these goods can simplify the collection process.
Input Tax Credit: Businesses further down the supply chain (wholesalers, retailers) generally cannot claim input tax credit on the VAT embedded in the MRP of these goods because they didn't directly pay it.
Supermarkets and MRP: Recently, the National Board of Revenue (NBR) in Bangladesh has issued clarifications regarding Value Added Tax (VAT) in supermarkets and their relation to the Maximum Retail Price (MRP).
While the standard VAT rate is 15%, supermarkets are now generally expected to sell goods at the MRP, which includes this VAT. "They can then claim input tax credits for the VAT paid on their purchases, ensuring that consumers aren't charged an additional VAT on top of the MRP."
This allows supermarkets to claim input tax credits on the VAT they've paid when purchasing goods, ultimately ensuring that consumers are not charged VAT on top of the already inclusive MRP.
It's important to note that the specific list of goods taxed based on MRP and the applicable rates can change based on government regulations and notifications issued by the NBR.