BGMEA urge withdrawal of tax at source on RMG products

Bangaldesh Finance Minister AMA Muhith had proposed 1.5 percent tax at source on all products, including RMG, for 2016-17 fiscal year, but later cut it to 0.7 percent following demand by businesses.

However, BGMEA has demanded that the readymade garments sector be kept out of the purview of tax at source for next two fiscals since the industry experienced a gradual drop in export growth in past few years.

BGMEA’s President Siddiqur Rahman described the current market situation as ‘critical’ and made some more demands at a press conference at the BGMEA building in Dhaka on Saturday.

The BGMEA’s other demands which includes halving 20 percent corporate tax for next five years, extra 5 percent incentives for BGMEA and BKMEA and adopting a stable revenue policy to encourage investors.

BGMEA President said that the average growth of export in RMG sector was 13 percent in past 10 years, but it dropped to 2.21 percent in the current fiscal for which he blamed unsuccessful bids to enter new markets, the crisis of gas and power supply, and high rates of interest on bank loans for the fall.

Export from this sector dropped by 6.8 percent to the US and 5.91 percent to the EU countries. The export from the sector is decreasing in a ‘worrying’ rate due to ‘silent recession’ in the US and European Union countries, the major markets for Bangladesh’s RMG products.

The $28 billion RMG sector contributes to around 80 percent of Bangladesh’s total export. To help the sector stay in the world market BGMEA President stressed the need for withdrawal of the tax at source on RMG products. Taxes are paid on yarn, cloth, accessories, washing and end products.

In the past four years, 1,200 RMG factories were closed and around 400,000 workers lost jobs.