The government has reduced source tax on export earnings for readymade garment and other export sectors to 0.60 per cent from existing 1 per cent amid hectic lobbying by apparel makers. The government also reduced the corporate income tax rate for the RMG manufacturers and exporters to 12 per cent from 15 per cent. The National Board of Revenue on September 6 issued two separate statutory regulatory orders in this connection. The benefits were given with retrospective effect from July this year.
The reduced tax rate will remain applicable for one year up to June, 2019. Export tax rate was 0.70 per cent in the last fiscal year 2017-2018.The government increased the tax rate to 1 per cent in the budget passed on June in the parliament. It also increased the corporate income tax rate for RMG makers to 15 per cent from previous 12 per cent. As per new SRO, corporate tax rate for green building certificate holding apparel companies has also been reduced to 10 per cent in the year from the previous 12 per cent.
NBR officials said that the government cut the export tax rate and restore the corporate tax rate for apparel industry after exporters intensified their pressure putting forth possible increase in their cost of production due to implementation of upcoming new wages for workers. Apparel exporters also argue that Bangladeshi exporters are facing stiff competition in global market for the rise in production cost. The government considered the issues while deciding tax rate cut. NBR officials said that source tax deduction authorities, mainly banks, will adjust the amount deducted in the last two and a half month from the applicable tax in coming days.
