Bangladeshi Apparel Export Sector Seeks Tax Breaks In Budget
Bangladesh’s apparel export sector is seeking tax breaks and extended policy support in the upcoming budget due to a slowdown in global demand and rising production costs.
This includes a significant reduction in source tax and VAT relief on raw materials, which can help them navigate challenging economic pressures.
The garment factories have requested the government to reduce source tax on exports from the present 1 percent to 0.5 percent and maintain this rate for the next five years.
The government had earlier in the fiscal 2022-23 budget increased the source tax on export earnings to 1 percent.
According to the exporters, the post Covid-19 environment and conflicts like the Russia-Ukraine war and the Israel-Palestine war, have prolonged global economic instability and negatively impacted sales.
The industry has warned that the slowdown may persist for the full financial year of 2024, which will put further pressure on exports.
“Reducing source tax to 0.5 percent will help address all challenges and encourage exporters to boost their export volumes,” the clothing exporters argued.
“The exporters are also seeking reduction in the income tax deduction on cash incentives from the present 10 percent to 5 percent,” the Dhaka Tribune reported.
“Rising bank loan interest rates, fuel shortages, increased raw material and transportation costs, and higher oil and gas prices have made it difficult to maintain production capacity,” they said.
Clothing factories have also requested for waiver of 7.5 percent VAT on sourcing of raw materials for production of recycled fibres and another 15 percent VAT on the purchase of these fibres.
