Frozen food exporters want cut in tax at source to 0.3 percent from the existing 0.6 percent in the next budget demanding that the waiver is necessary for the sector to stay competitive in the global market. The exporters said they sought the tax benefits as the production cost went up due to lack of sufficient supply of shrimps. The sector people can now utilize only 15 percent of the installed capacity as they did not have enough supply of shrimps. The fluctuation of exchange rates and devaluation of euro, ruble and yen against US dollars pushed them to tougher competition in the global markets, according to the industry insiders. Bang-ladesh Frozen Foods Exporters Association (BFFEA) placed a set of demands before the National Board of Revenue for the upcoming budget.
The demands were placed through the Federation of Bangladesh Chambers of Commerce and Industry. The NBR will hold a pre-budget meeting with the sector representatives this week to discuss the issues and to hear the logic for cut in tax at source. BFFEA also demanded withdrawal of five percent advance income tax on cash incentive for frozen foods export. The organization demanded withdrawal of four percent value added tax (VAT) on packing materials, fuel and lubricant, chemical and detergent, ice purchase and uniform and liveries, and 4.5 percent VAT waiver on carriage inwards and outwards.
BFFEA urged the government to withdraw 15 percent VAT on fuel and lubricant, repair and maintenance, travelling and conveyance, staff's food, courier and postage, printing and stationery and survey fees. "Frozen foods sector doesn't depend on any imported raw materials and adds 100 percent value. The garment industry is dependent on imported raw materials and pays 0.60 percent tax at source. Although the frozen foods sector adds full value, it has to pay same tax at source as garment industry does," said BFFEA Senior Vice President Kazi Belayet Hossain. "We want 0.3 percent tax at source to remain competitive in the global market," he added.
Talking about other challenges in the sector, Kazi Belayet has said the system of customs inspection of return cargo is very time-consuming and the payment through foreign currency for buying packaging materials is a major challenge for the sector people. According to the Export Promotion Bureau data, Bangladesh earned $536m by exporting frozen and fresh fish in the last fiscal year, which was 5.68 percent lower than $568m in the previous year.
The country fetched $358m by exporting fresh and frozen fish in the July-January period of the FY2016-17, which is 3.89 percent less than $372m in the same period previous year.
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