National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan has raised concerns over the continued tax benefits enjoyed by the ready-made garment (RMG) sector, questioning why it still pays reduced taxes even after 50 years while most other industries adhere to the standard rate.
Addressing a pre-budget meeting at the NBR headquarters in the capital's Agargaon on Thursday, he said the apparel sector continues to pay only a 12 per cent tax.
Representatives of all district chambers in Dhaka and Mymensingh divisions, including the Mymensingh Chamber of Commerce and Industry, attended the meeting.
Bangladesh Lub Blenders Association, Bangladesh Marine Fisheries Association, and Bangladesh Paper Mills Association (BPMA) put forward their proposals at the meeting.
The NBR chairman challenged clothing exporters by stating that while other sectors pay the regular tax rate, the garment industry remains reluctant to do the same.
He urged RMG exporters to transition to the standard tax structure, clarifying that businesses incurring losses are not required to pay taxes and will only be taxed based on their profits.
Emphasising the need for reforms, Khan asserted that the country must gradually move away from tax exemptions.
The RMG industry currently pays a 1 per cent source tax on export value. When filing tax returns, the garment and textile industries are subject to a 12 per cent tax rate, while green factories benefit from a reduced rate of 10 per cent.
Anwar-Ul Alam Chowdhury Parvez, president of the Bangladesh Chamber of Industries (BCI) and former president of the Bangladesh Garment Manufacturers and Exporters Association, refuted the NBR chairman's statement, asserting that businesses are required to pay taxes even when operating at a loss.
In his written proposal, he called on the government to cut the export tax rate by half from the existing 1 per cent.
Raising concerns over the deteriorating law and order situation, he questioned the justification of paying taxes, emphasising the lack of safety and security, which, he noted, has made even children afraid to leave their homes.
At the meeting, BPMA proposed revoking the waiver of import duties, tightening controls to prevent bond misuse, and imposing the highest duty rates on various types of imported paper.
The domestic paper industry is under existential threat due to rampant imports, the misuse of bond facilities through false declarations, and smuggling, said its leaders.
The association highlighted that Bangladesh's paper industry is now import-substituting, export-oriented, and eco-friendly.
With a production capacity of 1.6 million metric tonnes per year, the industry exports 900,000 metric tonnes of paper to 40 countries after meeting domestic demand, it said.
The industry also generates Tk 50 billion in annual revenue for the government and saves significant foreign exchange, BPMA leaders added.
Meanwhile, BCI leaders recommended lowering the tax rate to 2.5 per cent unconditionally, arguing that high tax rates hinder new investments.
They also suggested reducing the tax rate to 25 per cent for private limited companies and 20 per cent for publicly traded ones.
In addition, the trade body proposed increasing the tax-free income limit to Tk 0.5 million, reducing tax at source at the supply stage, cutting tax on export income from 1 per cent to 0.5 per cent, and simplifying the HS code-related complexities in exports.
Its President Parvez pointed out that gross profit is determined sector-wise, which is unreasonable.
He also highlighted that if gross profit declines or there is a loss, it is not taken into account, and the tax authorities do not consider a drop in sales compared to the previous year either.
"This issue needs to be addressed. Despite business losses, turnover tax is still applied, placing an undue burden on the organisation," he remarked.
BCI's additional demands include granting special tax holidays to industries in underdeveloped areas and allowing the import of raw materials, machinery, and equipment at the lowest duty rates.
The Narsingdi Chamber of Commerce and Industry proposed reducing VAT on wholesalers' turnover from 1.5 per cent to 0.5 per cent, lowering the tax rate on various categories of yarn, and eliminating advance tax.
In response to the proposals, the NBR chairman stated, "The organisations do not cooperate in VAT collection. They conceal accurate information, and we also suppress it."
This cannot continue, he added.
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