The readymade garment (RMG) manufacturers want the old source tax rate of 0.5% on export for the next five years.
They also said that if the existing source tax rate continued for the next 5 years, their industry could operate smoothly even amid ongoing crises, not to mention generate further revenue and employment.
Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), made the request during their post-budget press meet, in reaction to the proposed national budget for fiscal year 2022-23, in the capital on Monday.
He also said that due to the Covid-19 pandemic, there was no significant employment growth in this sector in the last two years.
Moreover, pressure on the balance of payments has been created due to rise in imports and decrease in remittance.
“There is a forecast on recessions in Europe and North America. We have to prepare for this. So, it is important to keep the way of progress smooth for the highest foreign earnings earner,” he also said.
He also said that they paid Tk1,166 crore as source tax in FY20, Tk1,320 crore in FY21, and Tk1,783 crore in FY22 (so far), and expected to pay Tk2,070 crore in upcoming FY23 if RMG export touched the milestone of $45 billion.
“This shows that if we can increase exports by increasing competitiveness, it is possible to increase revenue without raising source tax,” he added.
Earlier, on Thursday, Finance Minister AHM Mustafa Kamal proposed to increase the source tax on export products from 0.5% to 1%.
Faruque Hassan also said that they had requested the government to provide a 10% incentive on non-cotton garment exports to encourage investment and exports in the non-cotton sector.
Responding to a question, he also said that they were not asking to reduce the source tax, but merely retention of the existing rate.
This tax is deducted from the bank as soon as the order is approved. In future, as the industry will become bigger, new entrepreneurs will come, and exports will increase. It is possible to increase exports without raising taxes,” he added.
Responding to another question, Hassan said that the uniform corporate tax for all industries is commendable. The main goal is to increase the foreign reserve.
Regarding amnesty to money launderers, he said that their organization believed the decision on amnesty on laundered money was taken by the government after sufficient research, so they were hopeful about it.
The BGMEA president also hailed the decision of reducing VAT on MMF to Tk3 per kg from Tk6 per kilogram.
It will help to increase investment, he added.
Hassan also said that the Padma Bridge will play a big role in the industry.
They will request the authority to shift some trades to Mongla port as Padma Bridge will connect the port to the capital to decrease pressures on Chittagong Port.
They always thought about the workers of the industry and their well-being, Hassan mentioned.
Since the last wage board, the annual minimum increment is on. They also requested the government for the new wage board, he added.
In the press conference, the BGMEA president also discussed his recent tours to Germany, Italy, Switzerland, and Denmark.
During the visits, they met with Guy Ryder, director general of the ILO, representatives of Miles GmbH, and other European buyers and stakeholders.
The BGMEA president also disclosed his stance regarding the recent explosion in BM Depot of Sitakunda of Chittagong.
'BM Depot accident a big blow'
Responding to a question on the recent fire at BM Depot at Sitakunda in Chittagong, Faruque Hassan said it was a big blow to the country's industry, because it has tarnished the image of the country's RMG industry.
The depot had apparel products of some world-renowned brands, and the goods stored in the depot were received by the buyers as per the export agreement.
"Hopefully they will pay the payment against the goods," he added.
To prevent recurrence of such incidents, he advised the relevant authorities to conduct regular off-dock audits and bring the depot under strong compliance.
He also urged the insurance companies to play their roles in this regard.