Manufacturers of clothing accessories have asked for the suspension of corporation tax for three years.
They said that a number of accessory factories have closed or not resumed operations because they have not yet received payment from buyers, nor have they obtained financial support and another sufficient from the government during the Covid-19 pandemic.
They also urged the government to withhold corporate tax from the accessories sector for the next three years.
Manufacturers and exporters of clothing accessories and packaging made the demands during a pre-budget meeting recently at the office of the National Board of Revenue (NBR), led by NBR (Customs Policy) member Md Masud Sadiq.
During the meeting, Moazzem Hossain Moti, Chairman of the Bangladesh Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA), made a series of demands to be included in the budget for the next fiscal year 2022-23.
The BGAPMEA Chairman also said that commodity prices have increased by 500-800% over the past 2 years due to the pandemic, transport costs and the global container crisis.
Local manufacturers of accessories and packaging sell their products to the export-oriented apparel and some other sectors like pharmaceuticals and leather through back-to-back Letters of Credit (LCs).
He said that since buyers are not raising prices of products according to their costs, manufacturers are only operating their factory units to maintain operations during the pandemic without making a profit.
He also said that it was difficult to pay withholding tax for many factories in such a complicated situation.
Packaging and accessory manufacturers have also urged the government to reduce the withholding tax to 0.25% from the existing 0.50% and set the rate as a final regulation for the next three years to support the country’s small and medium-sized factories.
In order to help the accessories and packaging industry and save time and money, manufacturers have also required to allow renewal of various licenses once every three years.
Currently, manufacturers must renew compulsory licenses on an annual basis.
Under the new proposal, businessmen would pay the required fees for their licenses in one go for the next three years upon renewal.
Moazzem Hossain Moti said they needed 30 licenses and certificates including business, fire, bond and environmental certificates to set up a new factory.
He also said that all licenses and certificates are issued on an annual basis, with the requirement for annual renewal.
As a result, the industry needs to spend more time and money that could otherwise be saved, he added.
He also explained that if the government allows the three-year renewal cycle, the NBR will also benefit by receiving revenue or fees in advance.
In addition, they also asked for cash incentives, allowing outsourcing facilities to “reputable exporters” and implementing the NBR decision to allow the trade body to issue an Authorization for Use (UP) .
According to BGAPMEA, there are more than 1,800 clothing accessories and packaging factories across the country and they manufacture more than 30 clothing accessories and packaging items, meeting almost 90% of the demand in the clothing industry. clothing.
They produce poly bags, hangers, elastic straps, buttons, button labels, collar holders, tags, corrugated cartons, zippers, hang tags, back panels, back panels, neck tape, sewing threads, price tags, photo signs, gum tapes, fabric tapes, embroidery, upholstery, quilting and more.
At present, more than 7 lakh people are employed in this sector, with a total investment of around Tk 40,000 crore and 1,300 factories in operation.