Bangladesh has excluded export-orientated industries from paying value added tax (VAT) in a bid to boost their competitiveness before global textile trade quotas are dropped at the year end, a senior official said on Monday. "From now there will be no VAT on hundred percent export-oriented industries to give local exportable goods a competitive edge in the quota-free era," Abdur Razzaque, additional commissioner of the National Board of Revenue (NBR) told Reuters.
He was referring to international quotas on textile trade which will be dropped at the end of the year as part of global efforts for freer trade.
Bangladesh's ready-made garments make up three quarters of the country's exports. Other key exports include frozen foods and leather goods.
"This decision will immensely help price competitiveness of the export products," Kutubuddin Ahmed, the President of Metropolitan Chamber of Commerce and Industry, said in a statement.
Till now they had to pay 15 percent VAT for all export items.
Annisul Huq, president of Bangladesh Garment Manufacturers and Exporters Association, which lobbied for the change, said the decision showed the government was serious about facing the challenges of a quota-free era.
In the fiscal year to the end of June 2004, ready-made garments generated $5.69 billion in exports out of total exports of $7.6 billion.
Bangladesh plans to export $8.56 billion in goods during the current fiscal year, nearly 13 percent higher than a year earlier.