Bangladesh's NBR proposes cutting textile income tax to 15% until 2030

Bangladesh's National Board of Revenue (NBR) has proposed cutting the income tax rate for the domestic textile sector from 27.5% to 15%, with the reduced rate to stay in force until 30 June 2030. The tax authority sent the draft statutory regulatory order (SRO) to Finance Minister Amir Khosru Mahmud Chowdhury on 5 November for approval, and a senior finance official said the order would be issued shortly after he signs off.

The move targets the primary textile tier — yarn production, yarn dyeing, finishing, coning, fabric dyeing, printing and related activities, as the NBR defines the sector. It would restore most of the preferential regime that mills lost when the previous 15% SRO, introduced in 2015 for a 10-year period, expired in 2025 and the rate reverted to 27.5%.

Why is the NBR acting now?

The proposal cites five pressures on domestic mills, each named in the NBR's submission: rising gas and electricity prices, energy shortages, high interest rates, reduced export incentives, and competitive shocks following Bangladesh's graduation from the least developed country (LDC) category. The authority also flagged competition from subsidised yarn and fabric imports from neighbouring countries, which it said place local mills at a disadvantage.

The capacity numbers explain the urgency. Inadequate and irregular gas and electricity supplies have forced most mills to run at only 60-70% of production capacity, according to the NBR. That under-utilisation has squeezed working capital and pushed businesses toward financial losses.

How did the industry lobby shape the proposal?

The Bangladesh Textile Mills Association (BTMA) went further than the NBR. In May, it proposed a 10% income tax rate through 2030, arguing that the export-oriented ready-made garment (RMG) sector keeps a 12% rate and that the gap between the two interconnected industries distorts the supply chain. The NBR did not take up the 10% ask when it prepared the current fiscal year's budget; the new 15% proposal, built on Section 76(1) of the Income Tax Act, lands between the mills' demand and the standard rate.

What does the bonded-warehouse backdrop add?

The tax move follows a separate policy fight over yarn imports. The commerce ministry had made bank guarantees mandatory for imports of 10-30-count yarn under bonded warehouse facilities, then suspended the order after RMG manufacturers objected. That episode pits garment exporters, who want cheap imported yarn, against domestic spinners — the same disparity the BTMA raised in its tax argument.

What decision does this force on sourcing teams?

For buyers sourcing fabric or yarn from Bangladeshi mills, the SRO is a signal about supplier health rather than a price change. If approved, it restores a five-year tax cushion — until 30 June 2030 — for a mill base running at 60-70% capacity, and the NBR frames the relief as protection for exports and employment and as a route to "sustainable growth of the textile industry."

Compliance and sourcing leads should watch two checkpoints: the finance minister's approval, which the senior official said would come shortly, and any subsequent SRO language confirming the effective date and the sector's exact scope. Mills weighing capacity commitments against energy reliability, and RMG groups deciding between local and bonded-warehouse yarn, now have a dated fiscal anchor — 15% until mid-2030 — around which to plan, provided the order is signed as drafted.