Bangladesh has hiked corporate tax rate for apparel manufacturers and exporters to 15 per cent from the existing 12 per cent. And the rate of green factories has been increased to 12 per cent from the earlier 10. This is not being seen as a positive move by the industry, which is already facing price pressures, falling margins and rising operational costs.

This is especially true for owners of green facilities. In the first place, the investment on a green unit is high and so are the overheads and maintenance costs compared to a regular factory. The industry needs to come up with innovative solutions to cut costs and stay competitive. Some of the other ways to deal with this hike would be to increase efficiencies and go for value additions.

There is another separate 12.5 per cent tax structure proposed for public limited companies, which is seen as a move to encourage the participation of apparel units in the capital market – which is considerably low in Bangladesh. The only saving grace from the entrepreneurs’ point of view has been source tax has come down from the proposed one per cent and reinstated at the earlier 0.7 per cent.