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National Board of Revenue (NBR) is going to provide new tax waver facilities to Ready Made Garment (RMG), after reducing tax at source in RMG export from 1 pc to 0.6 pc in the last month.
“Now NBR would provide total exemption from Value Added Tax (VAT) in four internal expenditure categories of RMG sector,” said NBR sources, adding that tax exemption in those categories was an old demand of garment manufacturers.
In this regard, they said, the country’s tax authority is going to issue a notification soon, amending its rules and providing total exemption in four categories.
VAT on transport cost, laboratory test, ICT cost, and workers’ welfare fund will be exempted totally.
Sources said NBR has prepared new regulation under the VAT Act 1991. A Statutory Regulatory Order (SRO) will be issued soon after the finance minister signs the file.
A senior NBR official on Wednesday said, “BGMEA demanded tax exemption in a number of services related to RMG export. After scrutinising their demands, NBR has sent a summary to the finance ministry, offering tax exemption in four categories. After getting finance minister’s approval a notification will be issued.”
Besides decreasing tax at source, the government is providing different kinds of VAT exemption, starting from production phase to export, to RMG sector since the beginning.
RMG sources said Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has been demanding VAT exemption from 11 kinds of export-oriented services. Following their long-time demand, NBR is granting exemption in these four categories.
BGMEA president Siddiqur Rahman said, “Our demand is total VAT exemption for RMG sector. RMG sector gets services from various organisations. But instead of charging those organisations NBR collects VAT from RMG sector. That’s why we have demanded VAT exemption in 11 particular services.”
Informing that a good number of garment manufacturers have shut down their businesses in last few years due to decreasing prices of garment items in international market, he said, “Although NBR provides slab-based VAT exemption on gas and electricity bill, manufacturers do not get it back due to various complications related to customs and waver repatriation directorate.”
“So, to save this industry, we demand hundred percent tax waver on gas, electricity and water bills,” he added.