Tougher value addition rules for an RMG segment mulled
The government has planned to implement stricter regulations regarding the eligibility criteria for cash incentives provided to garment exporters who rely on materials supplied by their buyers. In another move, the duty concession on the import of materials for luxury hotels is likely to be withdrawn in the coming budget. Apparel manufacturers who receive fabrics and other materials from buyers and export finished products after cutting, making, and trimming (CMT), will now be subject to a revised calculation of their value addition. To qualify for cash incentives, the value addition must amount to at least 20%. Currently, exporters in this sector determine the value addition by subtracting the cost of production, including purchases from local markets and profit margins, from the export proceeds except for freight costs. Bangladeshi exporters buy various items such as cartons, poly, printing and labels from local markets. Exporters get incentives only when they add at least 20% value including labour wages and profits. According to exporters, 15-20% of the total exports of the readymade garment sector are on CMT basis. In the fiscal 2021-22, readymade garments exports were worth $42.6 billion. In the first 10 months of the current financial year, Bangladesh exported garments worth $38.5 billion.
Owning flat, land to get costlier as gain tax increase planned
Owning property may become costlier in the next fiscal year as the government moves to increase the gain tax, while benefits may be given to some specific electronics items to encourage local manufacturing. Also, local manufacturers of refrigerators, freezers, and their compressors are likely to continue benefiting from the current duty rebate for an additional year. Currently, the total gain taxes and fees on buying flats and plots amount to 10-12.5%, which may increase by 1-2 percentage points in the upcoming national budget. According to sources in the National Board of Revenue (NBR), the revenue officials involved in the budget formation process headed by the finance minister on 14 May presented this plan to the prime minister to incorporate in the finance bill. However, real estate businessmen say there is currently a downtrend in the housing sector due to the economic slowdown. If the tax is increased again, sales in this sector will further decrease, which will have a negative impact on the economy. Currently, flat and plot buyers pay a gain tax of 4%, a stamp fee of 1.5%, a registration fee of 1%, a local government fee of 1.5%, and a value-added tax of 2-4.5%.
Nagad Finance PLC gets new NBFI license
The Bangladesh Bank (BB) on Wednesday issued a notification granting license to ‘Nagad Finance PLC’ to operate as a new non-bank financial institution (NBFI). Earlier, the board of directors of BB gave final approval to Nagad Finance at a board meeting. Now Nagad Finance has no obstacles in running its business operations.