The government has decided to reduce both source tax and corporate tax for all exporters to support them to stay competitive in the international market. The government is set to reduce the tax at source on the export of readymade garment following demands of apparel exporters, said finance ministry officials.
The source tax will be 0.6 percent for exporters of all sectors, including those of readymade garments (RMG), leather, jute and frozen foods. Besides, the corporate tax rate will be 12 percent for apparel exporters. However, the rate will be 10 percent for apparel factories having green building certification.
In the budget for the current fiscal year (FY), 2018-19, the source tax for exporters was increased to 1.0 percent from 0.7 percent. A high official of NBR said that they were now working on reducing the source tax and a summary would soon be sent to the finance ministry for approval. The corporate tax rate for apparel exporters was also adjusted upward to 15 percent, and it was 12 percent for apparel exporters having green building certification.
A senior official of the National Board of Revenue (NBR) said the reduced tax rates will come into force with retrospective effect from July 01, 2018.
The decision on reduction of tax rates comes following the instruction of the government high-ups, after one and a half month of an imposition of the existing rates as per the budgetary measures, he added.
Responding to the issue, the NBR official said the paid tax at source will be adjusted with the next export bills as per the government’s latest decision.
Officials said the rate of source tax was increased to 1.0 percent following the expiry of the validity of an SRO on June 30, 2018, mentioning the special rate of 0.7 percent.
The finance minister, in his budget speech for FY 2018-19, said RMG industry is playing an important role in generating employment and fostering economic growth of the country.
He also said the government is offering special tax incentives to the sector considering its contribution.
The government has set US$ 44 billion earning target by exporting goods and services in this FY.
Apparel, jute and leather sectors together fetched about $ 32.71 billion in last FY. Of the sectors, RMG export earning posted an 8.76 percent growth to $ 30.61 billion.
Export of leather footwear grew by 5.33 percent in last FY compared to that of the previous year. However, total export earning from leather and leather products fell by 12.03 percent.
Report by- Doulot Akter Mala.