BGMEA demands tax waiver on recycled fibre

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has requested that the 7.5% Vat on the collection of raw materials and 15% VAT on supplying products to local spinning mills on locally recycled fibre be waived to attract more foreign investment.

The BGMEA leaders made the call while attending the pre-budget discussion on Tuesday.

BGMEA President Faruque Hassan said local value is added to the production of recycled fiber. No water or chemical materials are used in this process and no carbon dioxide is emitted. As a result, it plays a special role in protecting the environment. Being used as a substitute for cotton will save at least 30 percent foreign exchange on imports.

According to the new law of the European Union in 2025, cotton fabrics should be produced with a maximum of 50 percent organic cotton or polyester in proportion, he added.

"Our garment products will be taxable in EU acceded countries and will face a tougher competition in view of the cancellation of GSP facility in 2026 to upgrade our country from least developed country to developing country."

"Besides, BGMEA has demanded reduction of tax at source from 1% to 0.50%, tax deduction rate on cash assistance fixed at 5%, corporate tax rate at 12%, resolution of complications in HS Code," he added.

In their proposal, BKMEA demanded 0.50% income tax at source, reduction of tax deduction rate on cash assistance to 3%, exemption from obligation to file nil VAT return, 100% VAT exemption on all goods and services.

NBR Chairman Abu Hena Md. Rahmatul Muneem said: "If the environment is clean through recycling, then we want to support it. "

"We don't need extra revenue if it helps the environment. We will do what we can to recycle," he added.