Government re-imposes 5% tax on edible oil

(Photo: Anteneh Aklilu)

As result of over invoice of edible oil, government has re-impose tax and tariffs on imported edible oil products which were removed for about four months to stabilize the market and minimize the economic effects of COVID 19 on households.
Eshete Asfaw, State Minister of Trade and Industry told Capital that the government’s initial removal of tax on the edible oil was to support the supply chain as well as unburdening citizens during the COVID 19. However as the State Minister explained government has decreased the amount of tax imposed on edible oils from 40 percent to 5 percent only.
There are over 900 companies importing different kinds of cooking oil mainly from Dubai, Netherlands, Indonesia, China and other Middle East countries. Also there are over 1,000 companies that are registered by the Ministry of Trade and Industry to process oil in the country. However, despite the price the supply has never met the demand. Currently, eight edible oil plants are under construction in Amhara region with an aggregate refining capacity of over 2,500 tons of edible oil. This is in addition to 11 huge edible oil refineries that are active in the country. Currently, the government only imports 40 million liters of edible oil every month; the country needs 57.2 million liters of oil every month.
As the minister highlighted, previously 40 percent of tax was imposed on imported edible oil, of which is 30 percent was of tariff and 10 percent for surtax (a tax levied on top of another tax). However on the re-approved tariff only 5 percent is imposed.
“Previously, the government had worked to fulfill basic needs of the people in helping them to pass the time and increase the supply to meet the demand in all different kinds of oil products,” said Eshete Asfaw, State Minister of Trade and Industry, adding that currently the economic pressure resulting from COVID has lessened and that activities are getting back to normal.
Through the past months the oil market has been showing massive reduction in the price including sun flower and other refined and standard oil products which on average then reduced by 20 birr per liter. However, as of the last three weeks the price seems to be back to its previous price. “There has been an over-hike to edible oils in the market that is not reflective of the current imposed tax. This to me is not fair at all to the consumer,” said Eshete, explaining that the situation will be put under control.
Currently the country imports 40 million liters of palm edible oil every month through 24 selected importers to distribute it with affordable price.
“The government will support local producers to increase their capacity and to begin their operation as soon as possible,” affirmed Eshete.
“Available capacity to expand production could make oil turn into one of the engines of economic growth of the country,” said Eshete.
The federal government spends USD48 million every month to import edible oil, underscoring the pressing need for import substitution, Ministry of Trade & Industry explained.
While import of edible oil is almost USD576 million annually, it accounts for almost five percent of the country’s imports, which stood at USD15 billion during the last fiscal year. As reports show the local production covers only 12 percent of the demand while the rest is covered by imports.