Bangladesh Textile Mills Association (BTMA) has demanded that the 7.5 percent VAT levied on scrap RMG fabrics [jhut] and 15 percent VAT on fibres made using such scraps be removed from the proposed budget for FY25.
"We are required to pay a 7.5 percent VAT on the scrap RMG fabrics and 15 percent VAT on fibres made using such scraps. Recycling mills in Bangladesh cannot use these RMG scraps to make fibres due to 22.5 percent VAT, which turns the scraps into waste and pollutes environment," said BTMA President Mohammad Ali Khokon, at a post budget press conference on Saturday.
Noting that the industry can produce 1,200 million kilograms of fibre using these scraps worth $4 billion each year, he said, "We are currently importing such fibre using foreign currency. International buyers often set conditions for producing 30-40 percent of clothes using recycled fibres."
The BTMA chief called on the authorities to withdraw the VATs on RMG scraps, considering the sustainability of the products. The BTMA president also demanded the withdrawal of 5 percent VAT on man-made fibre, and 5 percent advance tax and 5 percent advance income tax on flax fibre.
"Chillers are essential to maintaining proper humidity levels inside textile mills. They are necessary machinery," he said, noting that textile mills typically use chillers with a capacity of 50 tonnes or more.
"The government has already reduced the total tax incidence on chillers from 104.68 percent to 10 percent.
However, we believe it should go back to 1 percent considering chillers as capital machinery," Khokon said.
He requested that tax at source on RMG be reduced from the current 1 percent to 0.5 percent and that need to remain at that rate for the next five years, considering the final settlement. The BTMA president said textile and clothing industry are facing issues due to dollar crisis, inadequate energy supply and interest rate hike on bank loan. He demanded keeping the same corporate tax unchanged until 2030, he said.
"The 171 clause of the Customs Act-2023 states that any slight error in HS code would result in a 200- 400 percent fine," Khokon said, requesting the prime minister to withdraw this fine.
