The Bangladesh Textile Mills Association has called for an extension of tax incentives for the textile sector and a full exemption of VAT and other taxes on liquefied petroleum gas (LPG), citing rising production costs and persistent energy shortages.
The demand was placed during a pre-budget discussion for the 2025–26 fiscal year at the headquarters of the National Board of Revenue (NBR) in Agargaon on Sunday. BTMA President Showkat Aziz Russell presented the proposals on behalf of the industry.
Highlighting the sector’s growing dependence on LPG amid the ongoing energy crisis, BTMA leaders said the imposition of VAT and taxes on the fuel is adding to operational costs and undermining competitiveness in the global market.
They argued that a complete tax waiver on LPG at the consumer level would provide much-needed relief to export-oriented industries.
The association also urged the government to extend the existing reduced tax rate facility for textile mills engaged in key processes such as spinning, dyeing, finishing and printing until June 2030.
The current facility expired in 2025, raising concerns among manufacturers about a potential increase in their tax burden.
In addition, BTMA proposed a series of income tax adjustments aimed at easing financial pressure on exporters.
These include scrapping the 10 percent advance income tax on cash export incentives, reducing the source tax on export earnings from 1 percent to 0.5 percent, and lowering the minimum tax on turnover to the same level.
The association further recommended eliminating the source tax on cotton imports and setting a reduced rate on yarn supply.
On the VAT front, the organisation emphasised the need to rationalise taxes to bring down overall business costs. It proposed removing the 3 percent advance tax on the import of raw materials for export-oriented industries and extending VAT exemptions to fabrics produced from man-made fibres in power looms, similar to those enjoyed by handloom products.
It also suggested reintroducing a fixed tax of Tk 3 per kilogram on the local sale of all types of yarn, including DTY and FDY, and ensuring a timely, monthly refund mechanism for VAT and advance tax paid by exporters.
BTMA leaders said the these measures are essential for maintaining competitiveness as Bangladeshi textile producers face mounting pressure in international markets. They noted that higher energy costs, coupled with tax burdens, are eroding profit margins and threatening the sustainability of the sector.
Officials of the NBR assured that the proposals would be reviewed as part of the ongoing budget preparation process.