Dhaka, Bangladesh (BBN)-There may be some relief for the readymade garment (RMG) sector in Bangladesh with Finance Minister AMA Muhith saying the Government may consider the sector’s demand to cut corporate tax from 35 to 10 per cent.
The Finance Minister’s comment came at a meeting with leaders of three apparel sector bodies – Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), and Bangladesh Textile Mills Association (BTMA), reports the fibre2fashion.
The government had set a rate of 35 per cent corporate tax for the readymade garments sector from the 2014-2015 fiscal year, which has continued into the 2015-2016 fiscal as well.
The rate was 10 per cent from 2005 to 2014 under ‘special consideration’.
BGMEA president Md Siddiqur Rahman said, “The entrepreneurs will not have sufficient capital to reinvest after paying 35 per cent tax.
The massive export target set by the government cannot be achieved (with this rate of tax),” he said.
The government has set an export target of $33.5 billion for the current financial year with a growth of 7.38 per cent.
Rahman also urged Muhith to reconsider last year’s 35 per cent tax paid by the apparel manufacturers.
“The reduced tax (10 per cent) is effective for yarn, dyeing, finishing and jute sectors until June 30, 2015. In this view, the RMG sector also gets this facility,” he said.
Muhith ruled out any retrospective tax cut for 2014-15. “But we can consider what to do for the current year,” he said.
He asked the Finance Secretary and the Revenue Board Chairman to provide estimates of the impact on revenue if the government cut the corporate tax on the sector.
Commerce Minister Tofail Ahmed who also attended the meeting, supported the RMG entrepreneurs’ demand.
He also urged Muhith to consider the demand, mentioning several issues the entrepreneurs were facing.
“There are Accord, Alliance; they (the entrepreneurs) have to spend to meet compliance.
The government must stand by the businessmen during such a period,” he said.