Home Apparel Apparel sector seeks lifting of source tax

Apparel sector seeks lifting of source tax

Five-year policy needed to make investment plans: BGMEA chief

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Garment employees work in a sewing section of the Fakhruddin Textile Mills Limited in Gazipur, Bangladesh, where one million garment workers were fired or temporarily let go when fashion brands cancelled orders at the height of last year's coronavirus pandemic lockdowns

Leaders of the country’s apparel sector demanded  Thursday withdrawal of source tax and a five-year long policy to help businesses make plans prior to investment and create more employment. “The country’s readymade garment industry is passing through a very tough time due to declining trend in global demand. The international demand for apparel declined by 7.50 per cent while it is 6.0 per cent in the current year,” said Md Siddiqur Rahman, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA). The average growth of the sector was 13 per cent during the last 10 years while it stood at less than three per cent this year, he said while speaking at a pre-budget discussion of 2017-18 fiscal year held at the National Board of Revenue (NBR) office in the city. NBR Chairman Nozibur Rahman, among others, was present. “As source tax is collected from income, not from profit, we request to stop collecting it, or stop it for at least next two years,” the BGMEA leader proposed. Moreover, there is no fresh investment in the sector due to shortage of gas, electricity and poor infrastructure, he said demanding an effective government policy for at least five years so that entrepreneurs can make proper plans for their investment. The BGMEA, however, in its written proposal sought reduction of source tax to 0.50 per cent from existing 0.70 per cent.   There is no source tax in any producing country, Aslam Sunny, vice president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said adding they pay source tax at multiple stages from accessories and fabrics to finished products.   “The government provides subsidy to the tune of millions of taka to banks and others. We don’t want such support but we need policy support,” he said. They also proposed 10 per cent corporate tax in place of the existing 20 per cent for the next five years. Other demands included withdrawal of VAT from all services, duty-free import of all kinds of pre-fabricated building materials, safety equipment including fire resistant door, sprinkler system and emergency light with exit sign, firefighting pump system/hydrant system and their parts. Bangladesh Textile Mills Association (BTMA) general secretary Feroz Ahmed sought duty-free import of man-made fibre including dyed viscose and polyester yarn taking into consideration the growing demand for such items and to help promote product diversification. He also demanded duty-free import of bus bar tracking system for containing electrical hazards and ensuring compliance. Accessories makers, frozen fish exporters and terry towel and home textile makers demanded reduction in existing source tax and corporate tax. Kazi Roushan Ara, executive director of Leathergoods and Footwear Manufacturers and Exporters Association, demanded the same facility as now being provided to the garment sector.   Abdul Barik Khan, secretary of Bangladesh Jute Mills Association, sought withdrawal of all taxes and VAT from jute sector for next 10 years. Kazi Belayet Hossain, vice president of Bangladesh Frozen Foods Exporters Association (BFFEA), said each year some 100 to 150 containers are rejected for various reasons and they have to comply with at least seven requirements to get such containers released. He demanded easing of the process and reduction of source tax. Golam Kibria of Bangladesh Plastic Goods Manufacturers and Exporters Association recommended increase in number of bond officials. Vegetable and potato exporters demanded increased cash incentive to 30 per cent from existing 20 per cent and 10 per cent respectively. NBR Chairman Nozibur Rahman assured  providing all kinds of support and facility to honest businessmen. Terming the new online tax payment system ‘transparent and less time-consuming’, he said once the system starts, many problems would be solved currently being faced by the business community.   He assured discussing their demands with the finance minister and taking necessary measures.