Bangladesh garment makers have sought full waiver of source tax on export receipts for three years, claiming the initiative would help them reach $50 bn in shipments by 2021. Representatives of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) recently met senior officials of the National Board of Revenue (NBR) in this regard. Tax authorities now collect 0.70 per cent tax on total export proceeds from major export items, including garments.
BGMEA President Siddiqur Rahman told NBR officials that the amount of source tax collection from apparel shipment, which is not more than taka 2,000-2,500 cr on export receipts of $30 bn, is not a big amount. As the next budget would be worth taka 400,000 cr, there would be no big impact if the source tax is not collected from garment exporters considering the sector’s contribution to direct and indirect job creation, he added.
Garment shipments rose 9 per cent yearon- year to $22.83 bn in the first nine months of the current fiscal, according to official data. The BGMEA also demanded a reduction of corporate tax to 10 per cent for all exporters from the current rate of 12 per cent. A section of garment exporters, including non-existing firms, are importing fabrics duty-free and are selling them in the domestic market, which is hurting the industry, according to Mohammad Shamsul Alam of the Bangladesh Cloth Merchant Association. The Bangladesh Knitwear Manufacturers and Exporters Association demanded fixation of tax at 0.50 per cent only on cutting and making instead of the source tax on export proceeds.
The Leather goods and Footwear Manufacturers & Exporters Association of Bangladesh called for a reduction of tax on technical assistance and royalty fees. It also demanded duty-free benefit for importing fire and electrical items to ensure fire safety at factories.