BGMEA wants tax exemption

Apparel exporters are seeking the withdrawal of 10 per cent income tax on cash incentives against export earnings in the next budget for FY2022-23, to help them recover from Covid-19 fallout.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) will place the demand as part of their budget proposal to the National Board of Revenue (NBR) on February 17.

The government has been providing incentives to level the playing field for local apparel producers in the global market. So, there is no logical ground to cut the income tax from incentives, says the budget proposal.

It should be noted that on January 2 2020, the government had released a Statutory Regulatory Order (SRO) reducing the income tax to 5 per cent, but it expired on June 30 that same year.

BGMEA Vice President Shahidullah Azim said, “We have come up with the proposal as it is needed for the country and the sector. We believe that if the government accepts our proposal, the country will benefit from it.

“We believe that the government policies, especially the export-import policy, should be set for at least five years. But in Bangladesh, it changes every year. It is a barrier to the ease of doing business. The government must come back from it to further develop the private sector.”

In the proposal, the BGMEA also sought tax exemption to subcontracting factories to increase investment, employment generation and facilitate export growth.

The finance ministry had fixed source tax 0.5 per cent for the readymade garment sector. BGMEA will propose that the government fix the same rate for the next five years. They will also propose that the current corporate tax rate be kept steady for the next five years.

Currently, green apparel factories are paying 10 per cent corporate tax, while the non-green ones are paying 12 per cent. Industry insiders claimed that if Harmonized System (HS) Codes are not included in the bond license, they have to face hassles to import raw materials.

To avoid such a problem, the BGMEA will propose giving clearance if the HS Code is included in the utilisation declaration (UD).

They will also propose withdrawal of duty while importing a maximum of 10 Kg capacity washing and dyeing machines. To measure woven garments, BGMEA will propose using metre/yard units instead of Kg. It will also propose duty exemption for dummy imports.

The proposal letter requested tax exemption to help replace damaged fire extinguisher equipment.

BGMEA will also propose VAT withdrawal of raw materials or services collected through local sources and used for export-oriented goods or services such as printing machines, courier services, and interior decoration.