Small-scale makers seek VAT exemption for low-cost footwear

Small-scale footwear manufacturers have urged the interim government to exempt low-cost rubber and plastic footwear, priced at or below Tk 150, from the 15 percent value-added tax (VAT).

The current tax policy is pushing the industry towards collapse, said the Bangladesh Footwear Manufacturers' Association at a press conference at the Dhaka Reporters' Unity on Tuesday.

They said the withdrawal of the VAT exemption has increased production costs, reduced demand, forced factory closures, and caused significant job losses, particularly among informal workers.

Mohammad Fazlu, president of the association, said the government had been providing VAT exemption on plastic and rubber footwear since 2016, considering the growth of the local industry and the financial capacity of consumers.

However, midway through the fiscal year 2024-25, the National Board of Revenue (NBR) withdrew the facility through a statutory regulatory order issued on January 9 this year, he said.

He added that the proposed budget for fiscal 2025-26 has retained the VAT, continuing the pressure on small producers.

"Our main customers are low-income people like hawkers, rickshaw pullers, day labourers, and others at the bottom of the pyramid. The VAT burden is directly impacting them," Fazlu said.