Bangladesh’s tax authority has recommended lowering corporation tax for the country’s primary textile industry to 15%, down from the current 27.5%, in a bid to relieve pressure on domestic mills and sharpen their competitive edge.
Should the measure win approval, the lower rate would stay in force until June 30, 2030, offering the industry a longer horizon of support.
The National Board of Revenue (NBR) has drawn up a draft statutory regulatory order (SRO) and forwarded it to Finance Minister Amir Khosru Mahmud Chowdhury for sign-off.
A senior finance official indicated that the order would be released soon after clearance is granted.
The NBR justified the recommendation by pointing to the need to safeguard exports and jobs and to secure sustainable growth across the sector.
By the NBR’s definition, the textile segment takes in spinning, yarn dyeing, finishing, coning, fabric dyeing, printing and associated operations.
Mills once benefited from a 15% rate under a 2015 SRO that ran for a decade. When that order lapsed in 2025, the rate climbed back to 27.5%.
In May, the Bangladesh Textile Mills Association (BTMA) lobbied for a cut to 10% running to 2030. It contended that export-focused ready-made garment manufacturers still pay 12%, leaving a gap between two closely linked industries.
The NBR, however, left that request out of its considerations when drafting the budget for the current fiscal year.
This fresh recommendation arrives as local mills grapple with mounting operational and financial strain.
In its paper, the NBR listed escalating gas and power tariffs, energy shortfalls, steep borrowing costs, trimmed export incentives, and competitive pressures following Bangladesh’s graduation from least developed country (LDC) status among the principal hurdles facing the industry.
“It also flagged competition from subsidised yarn and fabric shipped in from neighbouring countries, which leaves domestic producers at a disadvantage,” TBS reported.
According to the NBR, patchy and insufficient gas and electricity supplies have left most mills running at just 60-70% of capacity, tightening working capital and nudging firms towards losses.
The proposal also follows recent shifts in policy on yarn imports under bonded warehouse arrangements.
The commerce ministry had made bank guarantees compulsory for imports of 10-30-count yarn, only to suspend the requirement after RMG producers objected.
The proposed tax cut is expected to bring relief to local spinners and fabric makers, underpin jobs in the sector and bolster the global competitiveness of Bangladesh’s primary textile industry.
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