Bangladesh To Reduce Corporate Tax For Garment Manufacturers

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Bangladesh To Reduce Corporate Tax For Garment Manufacturers

In order to help exporters upgrade factories and boost investments, government of Bangladesh is set to revive the option of reduced corporate tax rate for the garment sector. From fiscal year 2005-06 till 2013-14, the sector paid corporate tax at a reduced rate of 10%. However, this provision expired on July 1, 2014 and the government did not extend it again, meaning the sector paid tax at the 35% rate in fiscal 2014-15. Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association, said that the garment industry is going through a tough time and the factories will have to be relocated or upgraded, so a higher corporate tax will be counterproductive: it will neither attract investment nor generate employment. Consequently, since the past four months, the sector's leaders have urged the finance minister to ease the burden of higher corporate tax.

Tofail Ahmed, commerce minister of Bangladesh, supported the demand for reduced corporate tax rate but from this fiscal year and not from fiscal 2014-15 since the tax assessment for fiscal 2014-15 has been already completed by the National Board of Revenue, so the facility cannot be revived from July 1, 2014. In a meeting yesterday, the sector's three trade bodies and Finance Minister AMA Muhith, Industries Minister Amir Hossain Amu and Commerce Minister Tofail Ahmed presented a number of demands, including cash incentives. Around 61% of the garment exports go to the European Union and in the last five years, the euro has eroded 21.35% against the dollar. In the last one year, the taka appreciated 3.27% against the euro, which also affected garment exports. Subsequently, they demanded that the exports to the Eurozone be given a cash incentive at the rate of 3%.