Bangladesh’s apparel exporters have called for tax relief in their reaction to the proposed FY2026–27 budget, warning that rising production costs and tightening liquidity are squeezing margins in the country’s largest export sector.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said the budget response should address mounting pressure from input costs, uneven tax incidence and constrained cash flow, which it argued are limiting reinvestment capacity and export competitiveness.
The association demanded a reduction in export-related source tax to 0.65 per cent from 1 per cent, along with a five-year guarantee on the rate to ensure policy stability for long-term contracting in volatile global markets.
It also pressed for full exemption of tax deducted at source on cash incentives, saying the current reduction to 5 per cent still leaves exporters facing liquidity stress due to delayed working capital recovery.
BGMEA called for removal of the 1 per cent double source tax on subcontracting, arguing that it raises costs for small and medium factories and disrupts production linkages within the supply chain.
On corporate taxation, the body sought safeguards to ensure preferential rates of 12 per cent for general exporters and 10 per cent for green factories are not effectively diluted through broader tax assessments that push firms into higher brackets.
It also urged withdrawal of import duties on polyester staple fibre, PVC resin and PET resin, citing the need to support a shift towards man-made fibre-based apparel production and reduce raw material costs.
BGMEA said the combined effect of tighter liquidity conditions, higher input costs and fragmented tax structures is weakening competitiveness at a time when global buyers continue to pressure prices and shorten order cycles.
It warned that without predictable taxation and targeted cost relief, the sector risks further erosion in margins, with implications for factory sustainability, employment and export earnings.
