The Bangladesh government is going to extend the existing reduced 15% corporate tax for the textile sector for another three fiscal years in terms of its compliance with some conditions, according to finance ministry officials. The extension will be effective from 1 July this year and will remain in effect until 30 June 2025.
Spinning, yarn dyeing, finishing, coning, fabric dyeing, printing or any other such industries will also enjoy the benefit. To get the benefits companies must be registered under the Companies Act, and comply with all provisions of that ordinance.
If they have paid any penalty slapped by any government authorities for violation of environmental rules and regulations, that fiscal year they have to pay a regular tax rate.
Currently, the corporate tax rate is 30% for non-listed companies and 22.5% for the listed ones.
The government has taken the move to extend the reduced tax rate facility as part of its revenue incentive policy geared towards making this industry globally competitive, ministry officials said.
Bangladesh has secured the second position in RMG exports globally because of such support.
And, to retain this achievement and to get expected revenue from this sector, the reduced tax rate should continue for the textile sector, they noted.
As the statutory regulatory order to this effect will expire on 30 June this year, the new budget will propose extending the facility up to 30 June 2025.
In the meantime, VAT on wholesale of fabrics at the local market will be slashed to 2% from 5% from the next fiscal year, according to a report published by a prominent newspaper.
The VAT rate cut will give a relief to local consumers as product prices have already gone high due to hikes in raw material prices.