The International Labour Organisation (ILO) has sought to exempt an assessment work on the country's readymade garment (RMG) factories under a joint initiative of the government and the ILO from the payment of value added tax (VAT), officials said.
The Ministry of Labour and Employment, on behalf of the ILO, recently wrote a letter to the National Board of Revenue (NBR) seeking necessary steps for exempting VAT worth $0.973 million, they added.
The government, in association with the ILO, launched the assessment on structural and other workplace safety against the backdrop of some tragic industrial accidents including Tazreen blaze and Rana Plaza collapse, which left several thousand garment workers dead and many others injured.
Under the initiative, experts of the Bangladesh University of Engineering and Technology (BUET) are assessing RMG factories.
Apart from the government-ILO initiative, western retailers also launched two separate programmes -Accord and Alliance--to assess fire, electrical and structural integrity of the garment factories and completed their initial inspection of around 1,700 units.
But, according to the existing rules, the factory assessment by the BUET is subject to payment of VAT, the Labour Ministry's letter said, adding being a UN organisation, the ILO should be kept out of the VAT purview.
Referring to the ILO, the letter also said: "The donor countries including the UK, the Netherlands and Canada are not willing to pay VAT and want that the government exempts VAT as its direct contribution to the project."
Though the VAT amount is not very high, it would be spent for remediation of the faulty garment units, a senior Labour Ministry official told the FE on Thursday.
On the other hand, the government with the ILO launched a $24.21 million project titled "Improving Working Conditions in the Readymade Garment Sector" last year.
The three-and-a-half year initiative focuses on minimising the threat of fire and building collapse in RMG factories and on ensuring the rights and safety of workers.
Five main components of the projects included building and fire safety assessment, strengthening of labour inspection and support, fire and building inspection, building occupational safety and health awareness capacity and systems, rehabilitation and skills training for victims and implementation of Better-Work programme in Bangladesh.
About 1,500 garment factories are expected to be inspected under the joint project while only 400 garment factories out of 1,500 have so far been assessed by the BUET till middle of October last, officials said.
According to the ILO, the garment factory assessment would cost about $7.5 million while the amount of VAT is $9,73,301.
"But we are yet to get any response from the NBR," he said adding considering the importance of the garment sector to the country's economy, both nationally and internationally, the government has made pledges to improve working conditions and labour standards in the sector.
Moreover, the issue is also related to revival of the generalised system of preferences (GSP) in the US market, he added.
munni_fe@yahoo.com
ILO seeks VAT exemption on RMG factory assessment
Monira Munni | Published: November 08, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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