In the budget for the fiscal year 2020-21, tax at source for the country’s apparel sector was increased to 0.5% from 0.25%
Apparel exporters have urged the government to keep source tax at 0.25% for the next five years.
In the budget for the fiscal year 2020-21, tax at source for the country’s apparel sector, the $34 billion industry, was increased to 0.5% from 0.25%.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Manufacturers and Exporters Association (BKMEA) jointly in a letter sought the tax break to the Finance Minister AHM Mustafa Kamal.
“Production at the factories remained suspended due to countrywide shut down to stop spread of coronavirus. On the other hand, due to the outbreak of covid across the globe, the fashion industry is going through a critical time,” said the letter.
As a part of global business, Bangladeshi manufacturers also suffered a lot due to order cancellation and delayed payment, which led many factory owners to shut production and declare lay off, says the letter.
According BGMEA data, 1,150 factories have faced order held or cancelation totaling $3.18 billion so far.
On the other hand, due to the work order shortage, factory owners are running with low capacity, while a good number of factories were shut down, the letter adds.
Considering the global pandemic and for the sake of exports, the letter urged the government to keep tax at source at 0.25%, instead of 0.50% for the next five years.
It also called for treating the tax at source as final settlement.