Garment makers in Bangladesh has something to cheer about after the country’s National Board of Revenue has reportedly decided to waive off value added tax (VAT) on four new services for the readymade garment industry.
The four services on which value added tax has been waived off are, expenditure for workers welfare and entertainment, laboratory test, IT-enabled services and rent-a-car facility, on which VAT was charged ranging from 5 to 15 per cent earlier.
The National Board of Revenue reportedly issued a statutory regulatory order on November 29, which exempted the RMG from paying VAT on the above mentioned services.
It may be mentioned here that excluding the VAT exemption on the four new services, the readymade garment sector has been enjoying 100 per cent VAT exemption on 13 types of services including supply of goods and services, security, transport contractors and port services, and partial exemption of up to 80 per cent for another three types of services including electricity, water and natural gas bills.
The NBR’s move to exempt VAT on the four new services reportedly followed demands by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), which for long have been requesting VAT exemption for all types of services citing record keeping complexities as the sector enjoys VAT exemption for most of the services.