According to the 2019-20 national budget-
- Garment exporters enjoy 12% corporate tax
- Apparel manufacturers with certified green factories pay only 10%
- But the garment accessories exporters have to pay 32.5% corporate tax and 0.5% source tax
Exporters of apparel accessories and packaging products are continuously urging the government to fix the tax at source at 0.25% and corporate tax at 12% for the upcoming fiscal year. This sector is facing serious economic fallacy with the pandemic.
0.5 percent source tax and 32.5 percent corporate tax is an unjustified amount for this small-scale sector. Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) data analysis found that more than existing 1,700 small and medium accessories and packaging makers are fulfilling 95% of accessories’ demand products of the country’s $28 billion apparel industry and other export-oriented packing industries, including frozen foods and pharmaceuticals.
One platform based on backward linkage industries for the apparel industry-BGAPMEA, made a budget proposal for FY: 2021-22 to the National Board of Revenue (NBR) to discuss with the sector people on 10th March at a meeting founded by the NBR Chairman.
Abdul Kader Khan, President of BGAPMEA described their sufferings as the pandemic has severely impacted the country’s apparel sector and its backward linkage industry. Another problem is-the skyrocketing price of raw materials which isn’t adjusting with the prices of global finished goods likely rubbing salt on exporters’ wounds.
Khan showed about their fund to run the factories is facing shortness. The government announced stimulus package benefitted the big businesses but they did not get the desired funds.
The government should seriously think and approve a policy for this sector to go ahead.
The meeting ended with an eager request to the government to change source tax at 0.25% cutting 0.50%. Whereas corporate tax should be 12% instead of 32.5% for the following fiscal year.
Direct and deemed exporters are entitled to enjoy the same facilities as Bangladesh export-import policies though they have to pay the highest corporate tax.
They remind about 2019-20 when Bangladesh got over $5 billion from the exports of the apparel sector, of which direct export of accessories goods contain nearly $1 billion.