Entrepreneurs have demanded withdrawal of tax and VAT on the import of 43 types of chemicals used in the tannery industry to sustain the leather industry, the second largest foreign exchange earning sector in Bangladesh.
The Bangladesh Finished Leather, Leathergoods and Footwear Exporters Association and the Bangladesh Tanners Association (BTA) raised this demand at a pre-budget discussion meeting held at the National Board of Revenue (NBR) building in Agargaon in the capital on Wednesday (April 8).
The meeting was presided over by NBR chairman Md. Abdur Rahman Khan.
The traders said that it will be difficult to compete in the international market if production costs are not reduced compared to competing countries like India, Vietnam and Indonesia.
Therefore, it is important to completely withdraw source tax and value added tax (VAT) on the import of 43 types of chemicals and necessary equipment used in processing raw materials in 100% export-oriented tanneries.
The entrepreneurs said that raw leather is a perishable agricultural product. According to an SRO issued on May 26 last year, a 3% source tax has been imposed on the supply of raw leather. They demanded that this tax be canceled and raw leather be declared tax-free again.
In addition, the industrial owners called for effective assurance of VAT-free benefits for the use of electricity, water and fuel in industrial factories as per the 2019 NBR circular.
They also demanded an end to administrative complications and harassment in this regard.
The entrepreneurs said that currently most of the chemicals, capital machinery and accessories used in the tannery industry are import-dependent.
The total tax burden on the import of these products, including customs duty, regulatory duty, supplementary duty, advance income tax, advance trade VAT and source tax, is more than 30%.
This is increasing the cost of production and making competition in the global market difficult.
According to the current policy, although 5% additional duty on ad valorem duty on chemical imports is conditionally exempted, the VAT rate in this sector is still 15%.
In this situation, entrepreneurs have proposed to issue a new SRO, exempting more than 3% of ad valorem duty and reducing VAT on chemical imports from 15% to 7.5%.
According to them, if these steps are implemented, the non-bond tannery industry will be more competitive, the tendency of irregular or roundabout chemical imports will decrease and production and exports will increase. At the same time, the government's revenue income will also increase in the long run.