In the backdrop of a likelihood that authorities will keep the Source Tax for Bangladesh’s garment industry unchanged, the apparel suppliers have called for a full withdrawal of the tax for “a short while”, saying it would be a big boost to the manufacturing sector’s target of hitting US $ 50 billion in exports by 2021.
Speaking at a pre-budget meeting with the National Board of Revenue (NBR), Siddiqur Rahman, President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), on April 24, 2018, said that Source Tax amounts to around BDT 2,500 crores on current export volume of US $ 30 billion.
“This is not a big amount and it can be overlooked at the moment to help the industry grow. Also, this amount will not affect the economy much, considering the direct and indirect employment opportunity this sector offers,” he said.
Bangladesh currently extracts a 0.7 per cent tax on total export proceeds on apparel items.
BGMEA President also pitched for reducing the Corporate Tax for apparel industry to 10 per cent from the prevailing 12 per cent. “The RMG industry is generating big sum on Corporate Tax. But many factories are closing down due to poor industry conditions. At this point, you (NBR) need to bring the corporate tax down to 10 per cent.”
Also present in the meeting, Mansoor Ahmed, first Vice President – Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), pitched for Government incentives for the knitwear industry: “For various reasons, growth in the knitwear sector has slumped. What it needs now is a boost from the Government.”
Among those present in the meeting were NBR Chairman Mosharraf Hossain Bhuiyan, member Firoz Shah Alam, and Bangladesh Special Textile and Power Mill Association leader Sheikh Abdul Hakim.
In a previous pre-budget discussion held between apparel manufacturers and the NBR earlier this month, the Tax Authority had hinted that Bangladesh will keep the current source taxing policy unchanged while formulating the budget for FY 2018-19.