Govt considers slashing supplementary duty on fabrics import

Amid the allegation that the fabrics imported for the cent per cent export-oriented garment industries under the bonded warehouse system are often smuggled out, the government is planning to slash the supplementary duty (SD) on import of fabrics in a bid to deal with the problem. According to sources at the National Board of Revenue (NBR), the NBR Bond offices from across the country have sent a proposal for reducing the duties on the import of fabrics for selling those locally. ‘Considering the proposals from the field offices, the NBR might reduce the supplementary duty for imported fabrics and this announcement is likely to come in the next budget,’ an NBR official said. Finance Minister AMA Muhith is scheduled to announce a budget of around Tk 2.5 trillion for fiscal 2014-15 on June 5 in Parliament, setting the revenue target at Tk 1.49 trillion. The NBR official said the government is incurring a loss of huge revenue in duties and taxes as the imported fabrics are smuggled out of the country though there is no study in this regard. He also mentioned that the growing trend in smuggling out of fabrics is a big threat to the local fabric industries that employed thousands of people apart from the huge investment. According to the system, the export-oriented industries are allowed to import duty-free fabrics under the bonded warehouse system. Eighty per cent of the fabrics that come under the system have to be exported while the rest 20 per cent is allowed as wastage. The bonded warehouse facility is important to export-oriented industries, especially the garment factories, in reducing lead-time and keeping product prices competitive. A section of businessmen misuse the bonded warehouse facility by selling the duty-free imported raw materials and finished goods to the local market, according to UNB.