Textile millers can benefit from a 15% corporation tax until 2025

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The government is set to extend the current reduced corporate tax rate of 15% for the textile sector for the next three fiscal years, subject to certain conditions being met, finance ministry sources said.

According to sources, the extension will be effective from July 1 this year (first day of the 2022-23 financial year) and will remain in effect until June 30, 2025.

According to players in the textile industry, currently the corporate tax rate is 30% for unlisted companies and 22.5% for listed companies.

However, the sector has benefited from a reduced rate (15%) for more than ten years, they also specified.

Sources also said that spinning, yarn dyeing, finishing, connage, fabric dyeing, printing or any other similar industry will also benefit from the continued tax rate.

However, companies must be registered under the Companies Act and comply with all the conditions and provisions of this order.

In addition, if the factories have paid any penalty implied by governmental authorities for violation of environmental laws, rules or regulations, the factories will not be affected by this benefit and will have to pay regular taxes for the respective financial year, the also said the source.

A ministry official said the government has taken the initiative to maintain the low tax rate facility for another three years as part of its revenue incentive policy to make the industry globally competitive.

Thanks to the continuous political support of the government, the country’s garment industry has obtained the second place in the world.

In addition, the ministry also noted that the reduced tax rate is expected to continue for the textile sector in the coming years to maintain this achievement and obtain the expected revenues from this sector.

Therefore, the draft national budget for the financial year 2022-23 will propose to maintain the reduced tax rate facility until June 30, 2025, as the regulatory order (SRO) for this purpose will expire on June 30 of this year. year.

Textile millers react

Textile millers hailed the move, which the government called a smart and encouraging move.

Speaking to the Dhaka Tribune, Fazlul Hoque, vice president of the Bangladesh Textile Mills Association (BTMA), said this is an encouraging move for the textile sector, as well as the country’s economy.

“The government will continue until 2025 and we certainly welcome this decision. We have been enjoying this facility for many years and hope that this facility will be further improved for the needs of the industry,” he said. added.

He also said that the industry is currently going through a tough time on various issues including the Covid-19 pandemic, inflation, rising commodity prices, rising transportation costs and many more.

“This kind of political support is definitely welcoming to the country’s industry in this difficult situation. We have asked the government to extend this facility for several years,” he added.

Azhar Khan, Chairman of Mithela Textile Limited, also echoed similar sentiments, adding that the local textile sector needed more attention from the government as it was the main backbone industry to the main one. source of the country’s export – the clothing sector.

Earlier, on February 11 this year, the BTMA sent its budget proposals to the NBR requesting an extension of the 15% income tax until 2026 in a bid to encourage investment.

At the same time, the platform also urged setting Value Added Tax (VAT) on all kinds of yarns at Tk 3 per kilogram for the financial year 2022-23 from Tk 6.

Mohammad Ali Khokon, Chairman of BTMA, formulated the demands in the draft budget for the financial year 2022-23.

Furthermore, the organization also urged the government to maintain the withholding tax at 0.5% and treat it as a final settlement to encourage new investment and also demanded the removal of a 2% tax on cotton purchases from local sources.

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