Boost Textile Recycling By Withdrawing Two Stage VAT – BTMA

The Bangladesh Textile Mills Association (BTMA) demanded the withdrawal of a two-stage value-added tax (VAT) on the purchase of textile waste from domestic market and also on production of recycled cotton yarn from the waste.

BTMA urged the National Board of Revenue (NBR) to introduce a new harmonised system (HS) code for recycled cotton fibre to avoid complexities over VAT and supplementary duty on the products.

Presently textile recycling plants pay 7.5 percent VAT while purchasing textile waste from local sources and also pay 15 percent VAT when selling recycled fibre produced from the waste to spinning mills.

“Due to this, spinning mills are discouraged from purchasing the recycled fibre as they can import virgin cotton duty free,” BTMA said.

“If the measures are implemented, spinners would be encouraged to use recycled fibres and cotton imports would decline by 30 percent, helping save $1 billion annually,” BTMA added.

As per estimates, the huge Bangladesh garment industry generates approximately 410,000 to 510,000 tons of fabric waste yearly of which only 5 to 6 percent is recycled in Bangladesh.