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RMG industry wants tax at source be cut to 0.3%

  • Published at 01:59 am April 20th, 2016
  • Last updated at 03:59 pm April 20th, 2016
RMG industry wants tax at source be cut to 0.3%
Readymade garment sector has called upon the National Board of Revenue to reduce tax at source to 0.3% from existing 0.6% on export of apparel products. It also requested the NBR to consider it to be the final settlement from the budget for fiscal year 2016-17. Representatives from Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA), Bangladesh Jute Goods Exporters Association and other stakeholders made the call at a pre-budget meeting, chaired by NBR Chairman Md Nojibur Rahman at the revenue authorities headquarters yesterday. BGMEA President Siddiqur Rahman urged the tax authority to provide the facility at least for next three years to help RMG sector turn around following the Rana Plaza disaster. The BGMEA boss also recommended the revenue board to set income tax at a minimum rate of 10% from the existing 35% for the next five years starting from next fiscal year. The apparel makers have enjoyed the reduced corporate tax rate at 10% from 2005 to 2014 under special consideration. The government, however, aligned the tax rate with the regular rate of 35% from 2014-2015 fiscal year. Arguing about the demand, Siddiqur said RMG makers have faced a tough time after the Rana Plaza disaster and also due to conditions imposed by the Accord and the Alliance, but if the benefit is allowed, it will help non-compliant factories and factories in small buildings to shift to new buildings to survive. Supporting the demand, Federation of Bangladesh Chamber of Commerce and Industry President Abdul Matlub Ahmad said reduction in corporate tax will also help RMG makers achieve the target of US$50 billion export. The other demands from the apparel makers include duty- and tax-free import of fire fighting equipment for compliant industries and withdrawal of VAT from purchase made through local letter of credit. The stakeholders also demanded the NBR provide an extension for audit document submission from existing three months to six months and end alleged harassment in the name of auditing by Bangladesh Bank and Local and Revenue Audit Directorate of the government. The auditors file cases against exporters by misinterpreting circulars and laws while providing cash incentives, alleged BKMEA former vice-president Mohammad Hatem. He also urged the NBR to free traders from filing up VAT returns as the export-oriented industries are enjoying exemption from paying VAT. Some VAT officials do not even want to receive the returns unless the ‘monthly settlements’ are made, Hatem said, arguing on the point. NBR member Barrister Jahangir Hossain said the system was introduced to increase the number of files of regular VAT returns, as only around 35,000 of VAT registered entities file their VAT returns regularly. The businessmen, however, need not worry about this further as only public limited companies will be assigned to deduct VAT with implementation of new VAT law, which will come into effect from July 2016. NBR Chairman Md Nojibur Rahman said there will be adjustments of different issues while the authorities will pass a transitional period to shift to new VAT law from the existing VAT Act of 1991. The board of revenues will hold focused group discussion to bring required changes to the system if any of those create complexity for business, added Nojibur. At the meeting, BGAPMEA former president Rafez Alam Chowdhury urged the NBR to authorise the association to give Utilisation Permission (UP) to its members and withdraw all kinds of tax, VAT and duty on import of construction materials to help build pre-fabricated buildings to ensure compliant industries. Bangladesh Textile Mills Association general secretary Feroz Ahmed demanded withdrawal of 1% duty on capital machinery import and 0.5% minimum tax on gross receipts, and withdrawal of source tax from purchase made through local letter of credit.
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