Apparel makers on Thursday demanded that the National Board of Revenue exempt RMG exporters from paying source tax on export proceeds for the next two years so that they can tackle the ongoing ‘crisis’ in the sector.
At a pre-budget discussion with the revenue board, Bangladesh Garment Manufacturers and Exporters Association president Siddiqur Rahman said that the NBR should stop deduction of source tax from export earnings or exempt the exporters from paying the tax for the next two years.
He also sought a five-year policy on major issues related to taxes and other issues crucial to the apparel sector.
The BGMEA and other export-oriented industries from textiles and RMG sectors including Bangladesh Knitwear Manufacturers and Exporters Association and Exporters Association of Bangladesh, however, in their written proposals submitted to the NBR on the day, demanded that the revenue board lower the source tax to 0.50 per cent from the existing 0.70 per cent and keep the rate unchanged for the next five years.
‘The apparel sector has been passing through a crisis due to the Rana Plaza building collapse and a fall in the demand for readymade garment items globally,’ Siddiqur said, adding that 1,200 factories were shut down in the country after the accident.
The Rana Plaza building collapse killed more than 1,100 people, mostly garment workers, in April, 2013.
The BGMEA president said the government of India has been giving special incentive to take forward their RMG sector while Bangladeshi entrepreneurs are facing various problems including inadequate infrastructure and shortage of gas.
Apparel export growth has become stagnant at 3 per cent in recent years, he said.
In this context, the RMG sector will be able to rebound if the sector can survive in the next two years. So, the sector needs policy support from the NBR for the two years, he said.
The BGMEA also demanded reduction of the rate of corporate income tax to 10 per cent for the next five years from the current 20 per cent, exemption from paying value-added tax on goods and services procured from local sources and filing VAT returns, allowing duty-free facility for import of different components of capital machinery separately from different countries, duty exemption on import of all types of fire fighting equipment and spare parts, and security equipment and VAT exemption on utility bills.
The BKMEA also sought reduction of source tax on export to 0.50 per cent, corporate tax to 10 per cent, and duty exemption on fire fighting and security equipment.
BKMEA first vice-president Aslam Sani said that there was no source tax on exports in any other countries.
So, the NBR can withdraw the tax or at least reduce it, he said.
EAB first vice-present Mohammad Hatem demanded an end to harassment by VAT officials in the name of audit and exemption from filing VAT returns in every month.
He also sought waiver from paying duty on import of fire fighting and security equipment for the apparel sector.
The Bangladesh Terry Towel Manufacturers and Exporters Association sought a reduction in duty on import of chemical for the sector.
Representatives from the jute sector demanded exemption from paying tax and VAT for the next 10 years.
Bangladesh Frozen Food Exporters Association urged the NBR to reduce the source tax to 0.30 per cent from the existing 0.60 per cent or accept the rate as final tax, and to withdraw the advance income tax at the rate of 5 per cent on cash incentive given by the government to the exporters.
The Bangladesh Textile Mills Association demanded withdrawal of duty on various raw materials for the primary textiles and reducing the highest rate of individual income tax to 25 per cent from the current 30 per cent.
At the meeting, NBR chairman Md Nojibur Rahman said that they would examine the proposals during budget exercise.
He said that the revenue board was working to ensure an appropriate environment for implementing the new VAT law, which would come into force from July 1.
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