Bangladesh recently decided to reduce further the rate of source tax on export earnings of readymade garment (RMG) manufacturers by 58 per cent. Finance minister Abul Maal Abdul Muhith conveyed his consent to the National Board of Revenue (NBR) to reduce that tax to 0.25 per cent from 0.6 per cent now. The rate was last slashed in September from the earlier 1 per cent.
Muhith reportedly gave his consent to a summary placed by NBR on a demand of apparel exporters to either waive the income tax at source on export earnings or lower it to 0.25 per cent.Bangladesh recently decided to reduce further the rate of source tax on export earnings of readymade garment manufacturers by 58 per cent. Finance minister Abul Maal Abdul Muhith conveyed his consent to the National Board of Revenue to reduce that tax to 0.25 per cent from 0.6 per cent now. The rate was last slashed in September from the earlier 1 per cent.#
NBR would complete the procedures, including taking vetting from law ministry, to issue the statutory regulatory order reducing the rate to 0.25 per cent, according to Bangladesh media.
NBR estimates that previous reduction in source tax may reduce its earnings from the sector by Tk 1,600 crore in the year. Now it will incur additional Tk 1,400 crore reduction because of the fresh tax cut.
Apparel sector had enjoyed 0.25 per cent source tax on export for the last time in 2005 and then NBR gradually increased the rate to 0.70 per cent in fiscal 2017-2018.
Immediate after the government offered the benefit in September, Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Knitwear Manufacturers and Exporters Association again demanded to cut the source tax further.
The benefit will be effective from July 1 this year with retrospective effect. (DS)
Fibre2Fashion News Desk – India
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