Bangladesh: 'Bring down corporate tax'

DHAKA (The Daily Star/ANN) - Garment accessories makers yesterday demanded lowering of the corporate tax to 15 percent from the existing 35 percent as the small and medium scale factories are struggling to keep afloat with paying such a high amount tax.

The sector, which is a crucial backward linkage for the $30 billion
garment industry, will have to continue to pay 35 percent corporate tax
next fiscal year too, in contrast to 15 percent for the garment sector.

“Our sector is composed of small and medium-scale factories,” said
Abdul Kader Khan, president of the Bangladesh Garment Accessories and
Packaging Manufacturers and Exporters Association (BGAPMEA).

Khan's comments came at a press conference organised by the
association to convey its post-budget reactions at the capital's Best
Western La Vinci Hotel.

“Our demands were not met in the proposed budget,” he said, while
urging the government to allocate a special fund to facilitate
flourishing of the sector.

At present, the 1,650 small and medium factories are able to supply
95 percent of the accessories requirement of the country's $30 billion
garment sector by employing more than 5 lakh workers, he said.

Previously, the garment exporters needed to import the accessories
mainly from Hong Kong, China and India. The local makers can manufacture
all 40 of garment accessories. They are also supplying different kinds
of products to sectors like pharmaceuticals and frozen food.

Timely supply of accessories by the local producers has helped the
garment exporters cut down the lead time significantly, which is
essential for remaining competitive in the global apparel trade, Khan
added. They also demanded lowering of source tax on export to 0.50
percent from the 1 percent proposed by Finance Minister AMA Muhith on
June 7.

The cost of doing business for the accessories makers will escalate
if the proposed tax rate is ultimately imposed, said Rafez Alam
Chowdhury, an adviser to the BGAPMEA.

Instead, the government should provide incentives for the $5 billion accessories sector, he said.

In another statement, Abdus Salam Murshedy, president of the
Exporters' Association of Bangladesh, urged the government to slash the
corporate tax for the garment sector to 10 percent.

For factories with green certification, it should be 5 percent.
Murshedy also demanded reduction of source tax on exports to 0.5 percent
from the proposed 1 percent, according to the statement.

The source tax for terry towel and home textile should be fixed at 0.25 percent.

The EAB chief also demanded a 5 percent cash incentive on export of garments as a safety measure for the sector.

Murshedy urged the government to bring to book those who have robbed
money from the banking system to restore confidence in the sector and
for establishing good governance.

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