The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has called for the removal of a 10% tax on cash assistance provided for the export of ready-made garments in the upcoming budget.
According to the BGMEA, as cash assistance is not considered business income, it is reasonable to exempt it from taxation.
The association emphasised the need for policy support from the government to ensure the sustainability of the export-oriented apparel business.
To enhance the business environment and reduce the overall “cost of doing business,” the BGMEA recommended measures such as uninterrupted electricity and gas supply, decreased value-added tax (VAT) and tax rates, single-digit bank interest rates, and the continuation of incentives for export earnings.
They also stressed the importance of prioritising simplified policies to facilitate “Ease of Doing Business” in the forthcoming budget.
Considering the current global economic instability, including the impact of the Russia-Ukraine conflict and the aftermath of the Covid-19 pandemic, the BGMEA expressed concerns shared by exporters across various industries.
They highlighted issues such as falling clothing prices in the international market due to inflation in the country, low orders, reduced prices, and insecure payments. In light of these challenges, the BGMEA expects government support through favourable policies.
The BGMEA further urged the government to reduce the tax at source for exports from 1% to 0.50% and maintain this rate for the next five years. They also proposed that garment industries be subject to a corporate tax rate of 12%, excluding specific types of income like Gain on Assets Disposal, Sub-contract Income, and miscellaneous expenses when assessing the sector.
Regarding subcontracting in the ready-made garment industry, the organisation recommended the implementation of tax at source based on the proposed steps at the time of subcontractor payment. They suggested treating this tax as final and, otherwise, applying a corporate tax rate of 12% during assessments.
In order to support the export business, the BGMEA proposed a reduction in the rate of income tax deduction at source from 20% to 10% for fees paid to the Exporter Retention Quota Fund (ERQ) for the growth and development of exports in the export-oriented garment industry.
Additionally, the press release highlighted the disruption in industrial production caused by the fuel crisis. The BGMEA emphasised the importance of duty concessional import of solar PV system equipment to address the energy crisis, reduce production costs, and maintain export flows.
