The Bangladesh Commerce Ministry has urged the National Board of Revenue to fix Tk3 as a uniform VAT rate on sales of 1 kg of yarn made from artificial and man-made fiber. Currently, the revenue board collects Tk3 in VAT on sales of 1kg cotton yarns and Tk6 for non-cotton yarns. Uniform VAT rate on all types of yarn will encourage local millers to produce more non-cotton yarns, say local textile millers. This will boost investment and employment in the sector, they add.

At present, local textile mills have to pay VAT on domestic sales of yarns. Earlier, the VAT on non-cotton yarns increased to Tk6 per kg. Md Khorshed Alam, Chairman, Little Star Spinning Mills, opines, the reduction in VAT on synthetic fibre-made yarns will help reduce prices of such fabrics in the local market.

Monsoor Ahmed, CEO, BTMA adds, garments made from synthetic yarns are mostly bought by consumers having limited income. Increasing demand is likely to encourage local entrepreneurs to set up factories for manufacturing non-cotton apparel items. A report by the Bangladesh Trade and Tariff Commission states, Bangladesh needs to reduce dependence on cotton as fabrics made from artificial fibre-made yarns are cheaper, more fashionable, more varied and more durable than fabrics produced from any other yarns. It urges the government to reduce VAT on sale of yarns made from artificial and manmade fibres to Tk3 per kg,