The Bangladesh Textile Mills Association (BTMA) has urged the National Board of Revenue (NBR) to withdraw the two-stage value-added tax (VAT) imposed on textile recycling units.
BTMA said currently textile recycling units pay 7.5 percent VAT when purchasing textile fabric waste from local markets and then again pay 15 percent VAT, when selling the recycled fibre to spinning mills.
“Due to this, Bangladesh spinning mills do not buy domestically produced recycled fibres, whether cotton or polyester, as they can import duty free cotton from other countries,” the association added.
Estimates indicate that the burgeoning garment industry in Bangladesh produces 400,000-450,000 tons of textile waste in form of fabric cuttings, of which only 4-5 percent is recycled.
BTMA estimates that if all the fabric waste from garment units is recycled in to fibres, then cotton imports would reduce by 30 percent and in the process, save US $1 billion in foreign exchange.
BTMA also said that once Bangladesh loses the Least Developed Status (LDC) in 2026, EU would impose duty on garment imports, while apparels produced from recycled fibres would enjoy a 30 percent rebate.
Bangladesh textile mills seek two-stage VAT removal on textile recyclers
