Textile mills in Bangladesh want the five per cent advance tax proposed on import of textile machinery and spare parts to be withdrawn.
They say the proposed taxes would discourage investment in the sector and halt expansion of textile mills in the country. The five per cent tax is also proposed on some raw materials used in textile mills such as polyester, tencel fiber and viscose. As of now import of textile machinery is subject to only one per cent customs duty.
Besides, another five per cent value added tax is contemplated on manufacturing of yarn. Yarn manufacturers say this will deter fabric manufacturers from buying local yarn since the proposed five per cent VAT on yarn will force a manufacturer to pay an additional amount for each kilogram of yarn. Bangladesh’s yarn manufacturers are facing trouble due to illegal imports of yarn. They want yarn to be kept out of the VAT net.
There are 430 yarn manufacturing mills, 802 fabric manufacturing mills, and 244 dyeing-printing finishing mills in Bangladesh. Proposals the industry has welcomed are those relating to keep the corporation tax rate at 15 per cent for the textile sector for the next three years and a one per cent cash incentive against exports of apparel goods to traditional markets.