Small-scale footwear manufacturers in Bangladesh have appealed to the interim Government to exempt inexpensive rubber and plastic footwear priced at Taka 150 or below from the current 15% value-added tax (VAT). The industry representatives argue that the recent removal of the VAT exemption is threatening the survival of their businesses.
Addressing a press conference at Dhaka Reporters Unity on Tuesday, the Bangladesh Footwear Manufacturers’ Association highlighted the negative impact of the tax policy. They stated that the VAT hike has led to increased production costs, diminished demand, factory closures, and significant job losses, especially among informal workers.
Mohammad Fazlu, president of the association, explained that the Government had been offering VAT exemptions on plastic and rubber footwear since 2016 to support industry growth and accommodate the financial constraints of consumers. However, midway through the 2024-25 fiscal year, the National Board of Revenue (NBR) withdrew this benefit through a statutory regulatory order issued on 9th January.
He further noted that the proposed budget for the upcoming fiscal year 2025-26 has maintained the VAT, intensifying the pressure on small producers. Fazlu emphasized that their primary customers are low-income groups such as hawkers, rickshaw-pullers, and day laborers, who are most affected by the additional tax burden.
The industry representatives called on authorities to reconsider the VAT policy to help sustain small footwear producers and protect the livelihoods of vulnerable workers.
