Finance Minister Muhith tells entrepreneurs he will consider RMG corporate tax cut

Finance Minister AMA Muhith has said he will ‘think about’ the demand by RMG sector entrepreneurs to cut corporate tax on the sector from 35 to 10 percent.

Leaders of the three bodies of the apparel sector met the minister at his office on Sunday.

The government has set a rate of 35 percent corporate tax for the readymade garments sector from the 2014-2015 fiscal year, which has continued into the 2015-2016 fiscal as well.

The rate was 10 percent from 2005 to 2014 under ‘special consideration’.

It was hiked as in other sectors, considering that the ‘capability’ of the industries had risen.

The apparel sector organisations represented at the meeting with the minister were Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), and Bangladesh Textile Mills Association (BTMA).

Industries Minister Amir Hossain Amu, Commerce Minister Tofail Ahmed, Finance Secretary Mahbub Ahmed, Commerce Secretary Hedayetullah Al Mamoon, National Board of Revenue Chairman Md Nojibur Rahman and Industries Secretary Mosharraf Hossain Bhuiyan were also present at the meeting.

BGMEA president Md Siddiqur Rahman said, “The entrepreneurs will not have sufficient capital to reinvest after paying 35 percent tax.”

“The massive export target set by the government cannot be achieved (with this rate of tax),” he added.

The government has set an export target of $33.5 billion for the current financial year with a growth of 7.38 percent.

The BGMEA president also urged Muhith to reconsider last year’s 35 percent tax paid by the apparel manufacturers.

“The reduced tax (10 percent) is effective for yarn, dyeing, finishing and jute sectors until June 30, 2015. In this view, the RMG sector also gets this facility,” he said.

The finance minister told the RMG sector leaders nothing could be done about the taxes of the 2014-15 fiscal year.

“But we can consider what to do for the current year,” he said.

He asked the finance secretary and the revenue board chairman to provide estimates of the impact on revenue if the government cut the corporate tax on the sector.

But no party could immediately come up with the estimates.

Commerce Minister Ahmed supported the RMG entrepreneurs’ demand. He also urged Muhith to consider the demand, mentioning several issues the entrepreneurs were facing.

“There are Accord, Alliance; they (the entrepreneurs) have to spend to meet compliance. The government must stand by the businessmen during such a period,” he said.

Tofail Ahmed also backed BKMEA President Selim Osman’s demand for a withdrawal of the decision to audit spending of cash help entrepreneurs get against Letters of Credit (LCs) opened following work orders.

Osman alleged harassment in the name of audit.