The government of Bangladesh is going to extend the existing reduced 15% corporate tax for the textile sector for another three fiscal years, subject to its compliance with some conditions, according to finance ministry officials.
This benefit will be applicable for Spinning, yarn dyeing, finishing, coning, fabric dyeing, printing or any other such industries. However, the companies must be registered under the Companies Act, and comply with all provisions of that ordinance. The extension will be effective from 1 July this year and will remain in effect until 30 June 2025.
Currently, the corporate tax rate is 30% for non-listed companies and 22.5% for the listed ones.
The move to extend reduced tax rate facilities as part of its revenue incentive policy is geared toward making this industry globally competitive. Ministry officials noted that Bangladesh has secured the second position in RMG exports globally because of such support. The reduced tax rate should continue for the textile sector to retain this achievement and get the expected revenue from this sector. The new budget will propose extending the facility up to 30 June 2025.
Furthermore, VAT on wholesale of fabrics at the local market will be slashed to 2% from 5% from the next fiscal year. Currently, the revenue board collects Tk3 in VAT on sales of 1kg cotton yarns and Tk6 for non-cotton yarns. There is no exact information on the number of transactions in fabric sales per month across the country. But Abu Motaleb said the Old Dhaka-centric markets have a monthly turnover of around Tk1,000 crore.
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