Bangladesh Government is planning to raise tax for its apparel sector, what is being viewed as against the interests of the industry that is targeted to reach US $ 50 billion by 2021.
In the budget plan for fiscal 2018-19 laid out before the parliament on June 7, 2018, the Government unveiled its plans to raise the corporate tax rate to 15 per cent for all garment companies, what was previously 12 per cent.
Also, there are plans to introduce a separate corporate tax structure for public limited manufacturing and export companies at 12.5 per cent. This new policy is seen as a new measure to encourage quality garments companies to come to the stock market. It is to be noted that though there are around 4,300 registered garment factories, but there are very few on the capital market.
Additionally, the corporate tax for green factories has been raised to 12 per cent, from what it was 10 per cent earlier. It is to be noted that some 289 certified green factories existing in the country have already complained that going green has not helped them in improving business.
“Readymade garments industry is playing an important role in generating employment and fostering economic growth,” Finance Minister AMA Muhith said while placing his speech at the parliament, adding, “Taking into consideration of that fact, readymade garments sector has already been given special tax incentives.”
The proposed hike in tax structure will have a negative impact on the growth of the apparel manufacturing sector, and consequently to creating employment and luring investment.
However, the budget is still a proposition and it will be passed after further discussion with all stakeholders on June 28, 2018.
