Yangon - Although garment manufacturers would rather pay taxes to import fabric, they have to resort to the CMP (cutting, making, and packaging) system for raw materials because of the high tax rate, according to Myanmar Garment Manufacturing Association (MGMA).
“The talks about changing the tax rate have been going on since the military government, but nothing has changed yet,” says MGMA chairman U Myint Soe.
Currently, a 15% tax is enforced on imported fabric, which leads garment manufacturers to apply for import licenses based on the tax-free CMP system. Although the application process for the CMP license took up to 21 days in the past, now obtaining a license is no longer necessary. Thus, it would be more convenient for the manufacturers if the government could change the tax rate, a garment manufacturer from Hlaing Tharyar Industrial Zone 4 said.
“The duty collection is adjusted only every five years, so it is not easy to change the tax rate now. If the association can’t wait, it can address their concern directly to the ministry,” said U Thein Pe, director at the Customs Department.
In the 2013-2014 financial year, garment exports reached a record-breaking US$ 1 billion.