To attract more investment, garment and textile makers of Bangladesh have urged the ruling government to reduce tax at source to 0.3 per cent for the next fiscal year from the proposed 1.5 per cent as the cost of production has been increasing year-after-year.
BGMEA president Siddiqur Rahman has said that if this is not possible, they would want that source tax should remain stagnant at the exiting 0.6 per cent for the sake of growth of export oriented industries. This would also create more jobs. BGMEA, Bangladesh Knitwear Manufacturers along with Exporters Association (BKMEA), Bangladesh Textile Mills Association (BTMA), and some other platforms related to the sector had jointly organized the press conference to voice their concern over the proposed 1.5 per cent source tax. The government plans to reduce corporate tax for the garment sector to 20 per cent from the existing 35 per cent. But Rahman demanded tax be set at 10 per cent.
He also urged the government to keep all the materials, purchased from the local market beyond the purview of value-added tax to make export more competitive. For the sake of market diversification and higher export growth, the apparel manufacturers sought an incentive of 2 per cent on the value of freight on board of garment items bound for European markets and 5 per cent incentive for new destinations. Subsequently, Rahman suggested framing the tax policy in such a way that entrepreneurs are able to forecast the tax regime for the next three to five years.
In the proposed budget, tax at source increased to 1.5 per cent from 0.60. This will hinder the growth of the sectors. And as a result of the proposed tax at source, the Textile and RMG sector would be the worst hit. As production cost has increased due to the compliance issues, the risk factor of RMG sector has already increased by 30 to 35 per cent. Considering all aspects, most RMG factories would not be able to survive, Rahman felt. The proposed budget has increased tax on chemicals from 3 per cent to 5 per cent, which will ultimately discourage investments, said AH Aslam Sunny, first VP, BKMEA. If the government continues to impose tax burden one after another on the industry people, it will be very difficult for the industry to grow further.