The government is set to revive the option of reduced corporate tax rate for the garment sector to help exporters upgrade factories and boost investments. The sector paid corporate tax at a reduced rate of 10 percent between fiscal 2005-06 and 2013-14. The provision expired on July 1, 2014 and the government did not extend it again, meaning the sector paid tax at the 35 percent rate in fiscal 2014-15. The garment industry is going through a tough time,” said Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association. The factories will have to be relocated or upgraded, so a higher corporate tax will be counterproductive: it will neither attract investment nor generate employment, he said. As a result, the sector’s leaders have been pursuing the finance minister for the last four months to relieve them of the extra tax burden. At a meeting yesterday between the sector’s three trade bodies and Finance Minister AMA Muhith, Industries Minister Amir Hossain Amu and Commerce Minister Tofail Ahmed, Rahman demanded the reduced tax rate to be made effective from July 1, 2014. The commerce minister supported the demand for reduced corporate tax rate but from this fiscal year and not from fiscal 2014-15. Muhith too assured the leaders of BGMEA, Bangladesh Knitwear Manufacturers and Exporters Association and Bangladesh Textile Mills Association of reviving the reduced tax rate from the current fiscal year.The tax assessment for fiscal 2014-15 has been already completed by the National Board of Revenue, so the facility cannot be revived from July 1, 2014. “But it would be possible to do it from July 1, 2015,” he added.At the meeting, the BGMEA leaders also presented a number of demands, including cash incentives. About 61 percent of the garment exports go to the European Union and in the last five years, the euro has eroded 21.35 percent against the dollar. In the last one year, the taka appreciated 3.27 percent against the euro, which also affected garment exports.Subsequently, they demanded that the exports to the Eurozone be given a cash incentive at the rate of 3 percent.They also demanded that the government scrap the practice of conducting an audit before handing out the cash incentive as they are subjected to harassments in the name of auditing.Ahmed said a separate meeting would be called in to discuss these issues. Mahbub Ahmed, senior secretary of the finance ministry, will examine the demands for cash incentives and recommend an acceptable solution. At the meeting, NBR Chairman Md Nojibur Rahman said the tax watchdog will introduce a scheme under which the consignments of those who are tax-compliant will not be checked during shipment. The tax regulator is now examining the level of tax compliance of all businesses.
