The garment accessories manufacturers have asked for the suspension of corporate tax for three years.
They said that a number of accessories manufacturing factories closed or failed to recommence operations as they haven’t received the payment from the buyers yet and also didn’t get sufficient financial and other support from the government during the Covid-19 pandemic.
They also urged the government to withhold the corporate tax of the accessories sector for the next three years.
The apparel accessories and packaging manufacturers and exporters made the demands at a pre-budget meeting recently at the National Board of Revenue (NBR) office, headed by NBR Member (Customs Policy) Md Masud Sadiq.
In the meeting, Moazzem Hossain Moti, president of Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA), made a bunch of demands to be included in the budget for the next fiscal year of 2022-23.
The BGAPMEA president also said the prices of raw materials have hiked by 500%-800% in the last 2 years due to the pandemic, freight costs, and global container crisis.
Local accessories and packaging manufacturers sell their produced goods to the export-oriented apparel and some other sectors like pharmaceuticals and leather through back-to-back letters of credit (LC).
He said, as buyers are not increasing prices of products as per their costs, the manufacturers are operating their factory units only to keep their businesses running during the pandemic without making profits.
He also said that it was difficult to pay the source tax for many factories in such a complex situation.
The packaging and accessories manufacturers also urged the government to reduce the source tax to 0.25% from the existing 0.50% and to fix the rate as a final settlement for the next three years to support the small and medium factories of the country.
In order to help the accessories and packaging industry and to save time and money, the manufacturers also demanded to allow the renewal of various licenses once every three years.
Currently, the manufacturers have to renew the mandatory licenses on a yearly basis.
According to the new proposal, businessmen would pay required fees against their licenses all at once for the next three years while going for the renewal.
Moazzem Hossain Moti said that they need 30 licenses and certificates including trade, fire, bond licenses and environmental certificates to set up a new factory.
He also said that all the licenses and certificates are issued on a yearly basis, having the annual renewal requirement.
As a result, the industry needs to spend more time and money that could otherwise be saved, he added.
He also explained that if the government allows the three-year renewal cycle, the NBR will also benefit by receiving revenues or fees in advance.
Moreover, they also demanded providing cash incentives, allowing sub-contracting facilities to 'deemed exporters', and implementing the NBR decision to allow the trade body to issue utilization permission (UP).
According to the BGAPMEA, there are more than 1,800 garment accessories and packaging factories across the country and they manufacture more than 30 garments accessories and packaging items, meeting almost 90% of the demand in the apparel sector.
They produce poly bags, hangers, elastic straps, buttons, button tags, collar stands, labels, corrugated cartons, zippers, hang tags, backboards, neck boards, sewing threads, price tags, photo boards, gum tapes, tissue tapes, embroidery, padding, quilting and more.
At present, more than 7 lakh people are employed in this sector, with a total investment of about Tk40,000 crore and 1,300 operational factories.