Local cement manufacturers have sought reversal of a provision regarding non-adjustable tax at their import and supply stage for the sake of the industry's survival.
They said the non-adjustable AIT (advance income tax), which is realised under two subsections of income tax ordinance, is uncommon and 'unjust' to them as a company has to pay this tax even if it incurs loss.
Bangladesh Cement Manufacturers Association (BCMA) sought withdrawal of the non-adjustable AIT on Thursday at an online post-budget press briefing.
"So far we know this non-adjustable tax is not applicable for any other sectors. I also do not know whether such type of tax is realised in other countries," BCMA president Md. Alamgir Kabir told the briefing.
As per existing provision, the cement companies pay 3.0 per cent tax at the import stage and another 3.0 per cent tax at the supply stage.
The tax imposed in both the areas is non-adjustable as per the section 82 © of the Income Tax Ordinance, 1984.
Mr. Kabir, also the vice-chairman of Crown Cement Group, said 3.0 per cent AIT cannot be considered as final settlement as many cement companies are unable to earn 1.0 per cent profit in the prevailing situation.
"Final settlement of 3.0 per cent tax is very unjust to us. No one can suppress it on us in a democratic country," said the BCMA president.
He said around 90 per cent production of the cement companies remained closed during first two months of lockdown period.
"The companies were able to restore only 40 per cent production in last month. The companies are bearing the costs of productions and wages of employees through great hardship," said the BCMA president, adding that it will take a few years to overcome the impact of COVID-19.
The BCMA has made another proposal to reduce import tax to Tk 300 from existing Tk 500 imposed per tonne clinker.
They said the rate of import tax stands will be 14 per cent if the price of imported clinker stands at $42 per tonne.
"There is no instance such high rate of import tax for other sectors. So, the import tax imposed on clinker should be 5.0 per cent or Tk 300 per tonne," the BCMA president said.
He said capitals of many cement companies are being eroded for bearing the production costs and wages of employees amid the ongoing pandemic.
The approximate amount of losses incurred by cement companies during the lockdown may stand at Tk 30 billion, according to BCMA president.
"Aggregate amount of bank loans taken by cement companies will be Tk 300 billion. Under such a situation, we need a strong budgetary support from the government."
Local cement manufacturers recently urged the government to refund an accumulated AIT worth Tk 7.5 billion calculated till the fiscal year 2019-20.
As per the section 146 of income tax ordinance, an amount is refundable if the paid amount of tax is higher than the amount of settlement, according to the BCMA president.
"Unfortunately, the cement manufacturers were unable to get back this fund year after year despite making pleas," Mr. Kabir said.
He said the cement sector is being deprived of Tk 750 million per year if 10 per cent interest is considered on the accumulated AIT worth Tk 7.50 billion.
Although more than 75 cement manufacturing companies have been established in Bangladesh, currently around 35 large- and small-scale companies are producing cement.
The local listed cement companies are Aramit Cement, Confidence Cement, Meghna Cement, M. I. Cement and Premier Cement.
Per capita cement consumption in Bangladesh was about 200 kg, while it is about 1700 kg in China, 1250 kg in South Korea, 800 kg in Malaysia, 500 kg in Thailand, 270 kg in Myanmar and 312 kg in India.
According to data of BCMA, individual house builders consume 50 per cent of demand, developers/contractors grab about 25 per cent and the government-controlled projects fill up the remaining 25 per cent.
