Leaders of primary textile mills on Saturday demanded the immediate withdrawal of 2% advance income tax (AIT) on cotton imports to safeguard local spinning mills.
They also urged the interim government to reset the 15% corporate tax until 2028.
BTMA VP Abdullah Al Mamun said the new tax would have a crippling effect on the industry already burdened by high energy costs, labour expenses, and declining export incentives.
"If the government does not reverse this decision by Monday (July 7), it will backfire and the revenue target will not be met. Meanwhile, cotton is stuck at the ports and no one is clearing it," Mamun warned.
The tax, set to be applicable on the import of raw materials such as cotton and man-made fibres, is technically adjustable according to the authorities. However, Mamun questioned its practicality.
"Once money enters the government's account, there's no precedent of getting it back. To pay this tax, we will need to take fresh bank loans," he said.
He further warned that the effective corporate tax rate for textile mills could rise from 27.5% to nearly 59% as a result of the new tax structure, rendering the industry less competitive compared to its regional peers.
Their other demands included the exemption of a specific tax of Tk5 per kg at the production stage on cotton yarn, synthetic fibres and other fibres produced by domestic textile mills.
Bangladesh Textile Mills Association (BTMA) made the demands at an emergency press conference held at Gulshan Club in the city.
BTMA President Showkat Aziz Russell, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Vice-President Amal Podder, Bangladesh Terry Towel and Linen Manufacturers and Exporters Association (BTTLMEA) Chairman Hossain Mehmood, Bangladesh Cotton Association adviser Mohammad Ayub, also spoke, among others, .
BTMA President Russell, who owns a textile and a denim factory, said the added costs will compel him to import yarn from India rather than buy from local mills.
"In today's environment, my denim factory cannot afford to source yarn locally anymore. No domestic textile mill can survive under such a policy," he added.
