Decision to Reduce VAT on LPG Imports

Business operators across Bangladesh have halted the sale of liquefied petroleum gas (LPG) nationwide, creating a severe shortage for households and commercial users alike. In response, the caretaker government has announced a significant reduction in Value Added Tax (VAT) on LPG, aiming to stabilise supply and reduce consumer costs.

According to an official notification issued on Thursday, 8 January, by the Ministry of Power, Energy and Mineral Resources, VAT on imported LPG will be reduced from 15% to 10%, while VAT on domestically produced LPG will be cut to 7.5%.

The decision follows consultations between the government’s Energy and Mineral Resources Division and the LPG Operators’ Association of Bangladesh (LOAB). Officials emphasised that the tax revision is intended to lower retail prices, improve fuel affordability, and ensure a steady supply across the country.

Government sources noted that the proposed VAT restructuring could have a direct positive impact on household budgets, particularly for middle- and low-income families, who have faced rising energy costs in recent months.

The announcement comes amid a period of abnormal price increases, which prompted business operators to suspend the supply and sale of LPG cylinders from the morning of 8 January. This has left consumers struggling to access fuel, with shops across the country reporting empty stocks.

Hotels and restaurants have attempted to maintain cooking operations through alternative fuel sources, but many households have been unable to cook, effectively leaving residents without a reliable energy supply. Citizens are expressing frustration over the sudden disruption, describing themselves as being “held hostage” by the shortage.

A summary of the VAT adjustments is provided below:

Energy experts have welcomed the VAT reduction as a timely intervention but stressed that stabilising distribution channels is equally crucial. They warned that unless supply constraints are addressed promptly, consumers could continue to face shortages despite the lower tax rates.

With households and businesses depending heavily on LPG for cooking and industrial use, authorities are under pressure to ensure uninterrupted supply in the coming weeks. Meanwhile, consumers remain hopeful that the tax cuts, coupled with government oversight, will bring relief and restore normalcy to the market.