BGMEA demands full VAT exemption on service charges

Bangladesh: The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has demanded the full withdrawal of VAT on charges paid by garment manufacturers for receiving diverse services from the vendors. The apex garment exporters’ association made the request in a recent letter written to the National Board of Revenue (NBR), the central authority for tax administration in Bangladesh.

Bangladesh: The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has demanded the full withdrawal of VAT on charges paid by garment manufacturers for receiving diverse services from the vendors. The apex garment exporters’ association made the request in a recent letter written to the National Board of Revenue (NBR), the central authority for tax administration in Bangladesh.

In the letter, the apparel traders’ body reportedly underlined that as per VAT Act-1991, the export-oriented apparel industry was fully exempted from paying VAT. Despite this, VAT on 38 types of services including laboratory test, consultancy, compliance audit, evaluation audit, ethical audit, legal consultancy, cost on labour welfare and entertainment, corporate social responsibility, building construction, courier service, and purchase of fuel for vehicles on export duty, continued to be levied since 2008.

The BGMEA further underlined that ready-made garment factories have to spend a huge amount of money for taking those services as part of the regular production activities. To add to that, payment of VAT on the aforementioned services have made things difficult for the garment exporters.

“The apparel industry has been carrying out business facing various adverse situations including the depreciation of Euro, Brexit, post US election impact and more importantly the continuing price fall of Bangladeshi apparel items,” the BGMEA mentioned in the letter.

The apex body further added, “In this context, the NBR should provide VAT exemption on service charges to facilitate the country’s economic flag-bearing sector to grow and sustain the competitiveness in the global market.”

The ready-made garment industry currently enjoys 80 per cent VAT waiver on electricity and gas bills, while 60 per cent on water bills.