Bangladesh Eliminates Advance Corporate Tax on Textile Raw Material Imports: A Boost for the Garment Industry
Tokyo, Japan – July 22, 2025 – In a significant move aimed at revitalizing its crucial garment and textile sector, the government of Bangladesh has announced the abolition of the advance corporate tax on the import of textile raw materials. This decision, reported by the Japan External Trade Organization (JETRO) on July 22, 2025, is expected to significantly alleviate the financial burden on manufacturers and further enhance Bangladesh’s competitiveness in the global textile market.
The advance corporate tax, a pre-payment of corporate income tax levied on imported goods, had been a considerable obstacle for businesses in Bangladesh, particularly those reliant on imported inputs. For the textile industry, which is the backbone of the Bangladeshi economy and a major export earner, the mandatory advance payment tied up working capital, creating cash flow challenges and potentially hindering production and expansion.
Why This Change Matters:
- Reduced Financial Burden: The removal of this advance tax means that textile manufacturers will no longer have to pay a portion of their anticipated corporate tax upfront when importing essential raw materials like cotton, synthetic fibers, dyes, and chemicals. This directly frees up capital that can be reinvested in production, upgrading machinery, research and development, or employee training.
- Improved Cash Flow and Liquidity: With less capital tied up in advance tax payments, businesses will experience improved cash flow and greater liquidity. This is especially beneficial for small and medium-sized enterprises (SMEs) that often operate with tighter financial margins.
- Enhanced Competitiveness: Bangladesh is a global powerhouse in garment manufacturing, known for its cost-effectiveness. By reducing the cost of imported raw materials indirectly, this policy change further strengthens its competitive edge against other textile-producing nations. It allows Bangladeshi manufacturers to offer more competitive pricing to international buyers.
- Stimulating Investment and Growth: The more favorable import regime is anticipated to attract further investment into the textile sector. Companies might be more inclined to expand their operations or set up new facilities in Bangladesh, knowing that the import process is becoming more streamlined and less financially demanding.
- Supporting the “Made in Bangladesh” Brand: The garment industry is a major source of employment and economic stability in Bangladesh. This policy change demonstrates the government’s commitment to supporting this vital sector, ultimately bolstering the “Made in Bangladesh” brand on the international stage.
Context and Significance:
The textile and garment industry is Bangladesh’s largest export sector, contributing a substantial portion of the country’s Gross Domestic Product (GDP) and providing employment to millions. However, the industry has faced its share of challenges, including fluctuating raw material prices, global economic uncertainties, and the need for continuous technological upgrades.
The decision to abolish the advance corporate tax on textile raw material imports reflects the Bangladeshi government’s proactive approach to addressing these challenges and fostering a more conducive business environment. This move is likely to be welcomed by international buyers and fashion brands who rely on Bangladesh for a significant portion of their apparel sourcing.
Looking Ahead:
While the specifics of the implementation and any potential transitional measures are yet to be fully detailed, the core announcement signals a positive shift for Bangladesh’s textile industry. Industry experts anticipate that this policy change will lead to increased production, greater efficiency, and ultimately, a stronger performance for Bangladesh in the global textile export market. This strategic decision by the Bangladeshi government is a testament to its dedication to fostering economic growth and supporting its key industries.
バングラデシュ政府、繊維原料の輸入に対する前払い法人税を撤廃
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At 2025-07-22 07:00, ‘バングラデシュ政府、繊維原料の輸入に対する前払い法人税を撤廃’ was published according to 日本貿易振興機構. Please write a detailed article with related information in an easy-to-understand manner. Please answer in English.