BTMA demands 2% advance tax on cotton imports to be scrapped

The association also presses for the removal of fixed tax on yarn and an extension of the reduced corporate tax rate beyond June

The Bangladesh Textile Mills Association (BTMA) has called on the interim government to withdraw the recently imposed 2 percent advance income tax on cotton imports, warning it could “severely undermine” the viability of domestic mills.

The association outlined three demands during a press conference at Gulshan Club in Dhaka on Saturday, arguing that “the tax burden would cripple Bangladesh’s primary textile industry and make it impossible to compete with international manufacturers”.

BTMA President Showkat Aziz Russell criticised the decision, saying it was introduced without consultation with stakeholders.

“Historically, cotton imports have never been subject to any form of customs duty,” he added.

“This abrupt move, though it may seem convenient for revenue purposes, is ultimately self-defeating.”

Showkat warned the new tax would sharply increase production costs, making it “difficult” for domestic mills to compete with their global counterparts.

"With this tax in place, it’s not just a matter of losing ground -- mills will not survive," he said.

The BTMA chief explained that since the advance tax must be paid with every consignment, it would effectively add up to 29 percent over the course of a year.

This, he warned, would erode working capital -- the funds used for day-to-day operations -- leaving factories unable to operate.

“If this cycle continues, mills will lose their working capital within three years,” he said, describing the outlook as unsustainable for an import-substitute sector.

He noted that the resulting disruption would open the door for foreign goods to “dominate” the local market, while “reducing” Bangladesh’s export value and hurting job creation.

Showkat said, "The economies of competitor countries will benefit, while we suffer both financially and in employment terms.

“Domestic value addition in exports will shrink. That’s why the advance tax must be revoked immediately.”

The BTMA chief also urged the government to extend the existing 15 percent corporate tax rate for textile manufacturers, which is set to expire in June.

Ending the concession, he warned, would add further “strain” on the sector.

He went on to oppose the Tk 5 fixed production tax per kilogram of yarn, including those blended with artificial or synthetic fibres, describing it as “a fresh blow to struggling mills”.

Showkat demanded that the levy be lifted as well.