The country's garment accessories sector demanded the same facilities as the readymade garment (RMG) industry itself in the proposed budget for FY20-21, urging the government to bring down the corporate tax rate to 12%, like it is for the apparel sector.
Currently, the apparel sector pays 12% corporate tax, while it is 35% for the accessories and packaging makers.
This backward linkage industry for the apparel sector also urged the government to keep source taxes unchanged at 0.25% instead of the proposed 0.5% for FY20-21.
Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) made the call reacting to the proposed budget for fiscal year 2020-21, announced in parliament on Thursday.
“As per the export-import policies of Bangladesh, direct and prospective exporters are entitled to enjoy equal facilities. But our corporate tax rate is higher than other direct export-oriented sectors, including the RMG sector,” said BGAPMEA president Abdul Kader Khan.
"For fiscal year 2020-21, our corporate tax rate is set at 32.5% from 35%, while the rate is set at 12% for exporters of apparel goods, and 10% for apparel manufacturers with certified green factories, said the business leader.
"To fight the impact of the Covid-19 pandemic, we are requesting the government set the corporate tax for garment accessories and packaging manufacturers at 12%," said Kader.
Most of the manufacturers in the sector are small and medium enterprises, which have been hit the hardest by Covid-19. For the sake of the industry’s survival, we are requesting the government keep the source tax unchanged at 0.25% for FY20-21 instead of the proposed 0.5%, he pleaded.
According to BGAPMEA data, there are about 1,700 small and medium accessories and packaging makers, who are capable of providing 95% supply of accessories products to the country’s $34 billion apparel industry and other export oriented packing industries, including frozen foods and pharmaceuticals.
Though the government has announced a 1% cash incentive in the proposed budget, the RMG's backward linkage industry is not getting it, said Kader.
He also urged the government to include the sector for cash incentives as it exports its goods directly as part and parcel of exports themselves.
In the last fiscal year, the sector contributed over $7.5 billion to the exports of the apparel sector, of which nearly $1 billion came from the direct export of accessories goods.