Bangladesh government has reduced corporate tax from 15% to 12% and also brought down the tax at source on export items, except jute goods, from 0.7% to 0.6% for the current fiscal year for garments sector, the $30 billion industry and lifeline of the economy.
Staff Correspondent
The declaration of these slashes came out at that moment while Bangladeshi apparel makers urged to cut in tax or incentives to go for implementation of new wage structure to be declared based on the proposal of workers and owners representative.
RMG manufacturers and trade body leaders made the call at an extraordinary general meeting (EGM) of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) held on 9 September.
In the budget for the fiscal year 2018-19, the government has increased corporate tax from 15% to 12% for apparel makers. However, in face of strong demand from the apparel sector people, the government has decided to keep the corporate tax the same at 12%.
On September 6, the National Board of Revenue (NBR) issued Statutory Regulatory Order (SRO), which stated that corporate tax would be 12% for the garment manufacturers.
As per the SRO, the green factory owner’s will also pay 10% corporate tax but it should be certified by the internationally recognized organization. The rate will remain effective for the current fiscal year. The move is to encourage green investment in the sector considering the environmental impact. As of today, Bangladesh RMG sector established 67 green building, the highest in the world.
I think, the government will see more investment from the garment sector as the cut in corporate tax will encourage new investment, which will help Bangladesh to create jobs to reduce the country’s unemployment.
After the announcement of National Budget for the Fiscal Year 2018-19, the country’s apparel makers urged the government to reduce corporate tax. They argued that it would attract new investment in the sector.
According to the new SRO, 0.6% tax at source on all exports except jute products will be effective from July 1, 2018, to June 30, 2019.
Admiring the government decision to reduce the corporate tax and tax at source rates, Exporters Association of Bangladesh (EAB) President Abdus Salam Murshedy said, “This is an admirable and timely decision that will benefit the country’s export-oriented business community. It has been a long-standing demand of exporters to ensure a level playing field, so the decision will definitely encourage them to move forward.”
Talking to Textile today, RMG leader and manufacturers termed the decision as a blessing for the sector as it is facing challenges in meeting the safety requirement, as well as the production cost, went up.
Faruque Hassan, Senior Vice President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said the Textile Today, “I think, the government will see more investment from the garment sector as the cut in corporate tax will encourage new investment, which will help Bangladesh to create jobs to reduce the country’s unemployment.”
On the other hand, the garment sector has to implement a new wage structure to be declared soon. So, the cut in those tax will help the manufacturers to minimize the pressure of increased expenses of new wage, he added.
“Since RMG sector contributes $30.60 billion to the country’s export earnings and employs 44 million people, the government has considered the demand of the sector of the corporate tax cut and cut tax at source,” Commerce Minister Tofail Ahmed said the Textile Today.
Our government is business friendly and it tries to provide policy support to ensure a congenial business atmosphere, said Ahmed.
According to the Export Promotion Bureau (EPB) data, Bangladesh’s export earnings from the RMG sector stood at $30.61billion, posting 8.76% growth in the last fiscal year. The figure is 1.51% higher than the target of $30.16 million for FY18.
Also Read: Apparel makers want tax cut to increase workers’ wage
