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The association urged the government to immediately withdraw the 2-per cent advance income tax (AIT) imposed on imported cotton and reduce corporate tax to 15 per cent from 27 per cent to avoid a crisis in the textile sector.
The Bangladesh Textile Mills Association recently urged the government to immediately withdraw the 2-per cent advance income tax (AIT) imposed on imported cotton and reduce corporate tax to 15 per cent from 27 per cent to avoid a crisis in the textile sector.
AIT will significantly increase production costs and make local mills less competitive compared to regional counterparts, it noted.
In separate letters to the finance and commerce advisers, the Bangladesh Bank governor and the chairman of the National Board of Revenue (NBR), BTMA president Showkat Aziz Russell said the newly imposed AIT, along with an increased specific tax on yarn, would severely disrupt domestic spinning mills and jeopardise the textile industry’s competitiveness.
The decision to raise the AIT was taken without consulting industry stakeholders and is likely to be ‘self-defeating’ for the sector and the wider economy, he was cited as saying by domestic media reports.
“Although it may appear to aid revenue mobilisation, this AIT will significantly increase production costs and make local mills less competitive compared to regional counterparts. Textile mills, especially in the spinning segment, will not be able to survive under this pressure,” the letter read.
The BTMA warned that paying AIT on every shipment will lead to working capital shrinkage over time, with the cumulative tax burden potentially reaching up to 29 per cent annually. If this continues, the industry’s working capital could deplete entirely within three years, the association cautioned.
Bangladesh does not produce cotton and is entirely dependent on imports, it said, noting that domestic mills have the capacity to supply cent per cent of yarn for the knit sub-sector and 55-60 per cent for woven apparels.
BTMA also protested the budgetary measure for FY26 raising the specific tax on indigenously-produced cotton and blended yarns per kg to Tk 5 from Tk 3. It argued that the raised tax will push up yarn prices and discourage garment manufacturers from sourcing within the country, leading to mill closures, job losses and declining value addition in the apparel sector.
Fibre2Fashion News Desk (DS)
