The National Board of Revenue (NBR) has withdrawn the 2% advance income tax (AIT) on imported cotton and man-made fibers for Bangladesh's garment industry. This exemption, effective immediately, applies to industrial Import Registration Certificate (IRC) holders, as per a gazette issued on July 17. Commercial importers are not included in this change.This reversal follows strong pressure from industry stakeholders. The 2% AIT was introduced on July 1 in the current budget, applying to over 150 imported raw materials. Textile mill owners argued that the tax would severely impact the struggling sector, potentially leading to mill closures and reduced export competitiveness.Bangladesh imports approximately 99% of its cotton for garment production, totaling 83.21 lakh bales in 2024. Major sources include Africa, India, CIS countries, Australia, and the US. Man-made fibers like polyester and acrylic are primarily imported from China.Saleudh Zaman Khan, Vice President of BTMA, welcomed the decision, noting that the tax would have made the effective tax rate for his factory 64%, despite an official rate of 27%. He emphasized the industry's inability to survive with an annual import tax of Tk32 crore on cotton alone, given the $4 billion annual import value of cotton and man-made fibers.NBR officials had initially defended the AIT, stating it was adjustable against final profits. However, mill owners deemed a 10% profit margin unrealistic and cited difficulties in obtaining refunds or adjustments. Showkat Aziz Russell, President of BTMA, also pointed out the inconsistency of taxing cotton imports but not yarn imports, which would increase costs for cotton importers.NBR sources confirmed that consultations with the International Monetary Fund took place before the decision to withdraw the tax. (ICE NEW DELHI)

Fonte notizia: The Daily Star