Manufacturers seek corp tax exemption for 3yrs

Garment accessories and packaging manufacturers have sought the withdrawal of corporate tax for three years to recover from Covid-19 fallout, beginning from the Fiscal Year 2022-23.

They also requested a reduction in tax at source from 0.50 per cent to 0.25 per cent, and urged keeping this rate for the next three years. These manufacturers currently pay 32.5 per cent corporate tax and 0.50 per cent tax at source.

The Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) – a platform of apparel backward linkage industry – made the call in its budget proposal for FY 2022-23, placed before the National Board of Revenue (NBR) on Thursday.

BGAPMEA President Mohammad Moazzem Hossain Moti said, “Garment accessories are an integral part of the sector and it is procured through back to back letters of credit (LC). Due to the supply chain disruption, raw materials prices have gone up by 800%.

“But the global retailers and brands did not increase the prices of goods, which is causing manufacturers to incur losses. Under such circumstances, it is difficult for the manufacturers to pay 0.50 per cent tax at source as well as the 32.5 per cent corporate tax.”

So, as a policy support to help this industry recover from the pandemic’s impacts, the government should reduce tax at source to 0.25 per cent and withdraw corporate tax for next three years, Moti added.

Accessories makers also called for cash incentives against deemed exports of accessories products.

Speaking with The Business Post, BGAPMEA Director Md Shahriar said, “We are contributing to apparel exports, and helping this sector ship goods with a shorter lead time.

“Despite making a large contribution to the RMG export earnings, we are not getting cash incentives against deemed exports of accessories goods.”

To help this sector recover, the government should consider our contribution and provide incentives against deemed exports of accessories goods, said Shahriar, also the managing director of Adzi Trims Ltd.

According to the BGAPMEA, the sector earned $7 billion through deemed export of garment accessories and packaging goods in the FY2020-21.

Of this amount, nearly $1 billion was directly exported to Turkey, Netherlands, South Africa, Pakistan, India, Middle East, Ethiopia, Indonesia, Italy, Sri Lanka, Turkmenistan, Germany, and Austria. Investment of this sector is about Tk 35,000 crore and value addition about 40 per cent.