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Manufacturers of equipment and packaging products want discounts at source

The Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) has demanded a source tax of 25 per cent for three years to sustain direct and covert exports while maintaining business. In the current fiscal year 2021-22, traders have to pay 50 percent withholding tax against the export of goods. Sometimes in a few years it was 25 percent.
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The BGAPMEA has made this demand in the recommendation given by the National Board of Revenue (NBR) for the implementation of the national budget for the next 2022-23 financial year. At the same time, they demanded that the licenses required for setting up industries and conducting business be extended to three years, that subcontractors be given the facility to work under contract or contract, provide incentives like other exporters, and be exempted from paying corporate tax for the next three years.

According to the BGAPMEA, the country is now self-sufficient in manufacturing various types of equipment in the garment sector, including garments and other packaging products. In the last financial year, the sector directly and implicitly exported goods worth about 600 million. At present, companies in the field of cartons, polybags, hangers, buttons, labels, zippers, hangtags, gum tapes and 30-35 types of apparel in the garment sector and other sectors make packaging. About 1,200 BGAPMEA member factories are operational.

In the next financial year, BGAPMEA has demanded to extend the license required for setting up industries and conducting business in the market for three years. They say 33 types of licenses or registrations, including trade licenses, bidder approvals, tax identification numbers or TINs, BINs, ERCs, fire licenses, bond licenses, availability of raw materials, and environmental clearances, are required to bring dynamism in setting up industries, exporting and conducting business. Most of these licenses or registrations have to be renewed every year. It costs money and time. If the licenses or registrations were done for three years with an advance fee, the government would get an advance payment, which would save time and money for the businesses.

Besides, BGAPMEA has demanded to increase the scope of bond facility for covert exporters. Traders in the garment sector have set up factories in several places, they said. However, as they do not have the facility of continuous bond, they have to take bond approval against each factory.

This business organization also seeks the benefit of contract work for disguised exporters like direct exporters. According to them, many companies with bond licenses in the garment sector have received additional procurement orders. In many cases it is difficult for companies to deliver products on time. Again, due to lack of purchase orders, some small and medium enterprises have problems in conducting business. Therefore, both the companies will benefit if the necessary equipment and packaging products are also provided in the sub-sector like ready-made garment industry.

When asked, former BGAPMEA president Abdul Quader Khan told Prothom Alo that it is true that there are a lot of orders for readymade garments at present. However, due to increase in raw material, ship and truck fares, the profit margins of the manufacturers of essential equipment and packaging products in the garment sector have declined. Direct exporters are not paying extra. In the current reality, in order to sustain this sector, the source tax has to be reduced.

Abdul Quader Khan said the sub-sector of equipment and packaging products has a big contribution in the export of readymade garments. Companies in the garment sector currently pay 12 percent corporate tax. Therefore, corporate tax should be levied at the same rate for the sub-sector of equipment and packaging products as an allied sector.

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