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Iran losing foreign apparel markets for misplaced taxation

Iran losing foreign apparel markets for misplaced taxation

TEHRAN: Iranian manufacturers of clothing items are losing the markets that exist in neighboring countries because the taxes that they pay are not collected at the right place, a sewing company owner told Trend September 10. “As the government does not have access to the end users or the shops that directly sell them the products, it collects the value added tax from the very manufacturer,” Saber Tousi, CEO of Indisheh Clothing Production said. “This increases the rise of production at any and every turn: once when the threat is bought, once again where the thread is dyed, once again when the garment is produced, and so forth.” According to Tousi, the situation has underprivileged Iranian manufacturers against colleagues from neighboring countries such as Turkey, who supply a great regional market. The dominance of foreign brands in Iran’s apparel market, mostly through smuggling, has undermined domestic production over the years.

The government puts illegal apparel imports at $2.5 billion per year, but the real figure is believed to be much higher. The abundance of foreign brands, which flaunt cheaper price tags, has eroded the competitiveness of domestic producers, as renowned foreign brands employ strong advertisement campaigns worldwide. Officials put the value of Iran’s apparel market at $11 billion. A minimum of 750,000 people are directly involved in the apparel industry in Iran. Iran exported 3,800 tons of apparel worth $46.2 million in the last fiscal year (March 2016-17), up 2.6 percent in volume and 3.9 percent in value when compared to the previous year.