Source tax for exporters may be slashed again

The National Board of Revenue is likely to cut the source tax on total export proceeds of exporters further in the face of demand from industries, particularly from apparel manufacturers.

The tax at source may be slashed to 0.25 percent from existing 0.6 percent on all export items except for jute and jute goods, said an official of the NBR seeking to remain unnamed.

A notification will be issued soon, the official added.

The move that comes just ahead of the 11th parliamentary election scheduled for December 30 is expected to please exporters.

The reduction of tax at source on export earnings would be helpful for owners to implement the new wage as they will have to pay less tax than before, said Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association.

The garment makers will have to implement the new wage from this month.

The BGMEA had earlier demanded withholding tax of 0.25 percent.

In September, the NBR cut source tax on the total proceeds from exports for all items to 0.6 percent, three months after raising the rate to 1 percent in the budget for fiscal 2018-19 in a bid to increase revenue collection.

The source tax rate for exporters excluding jute goods makers was 0.7 percent in fiscal 2017-18, according to the NBR.

The revenue authority is yet to make public the latest data on tax at source or withholding tax collection.

The NBR collected Tk 1,484 crore as source tax, mainly from garment shipments, in fiscal 2015-16, down from Tk 2,080 crore the previous year, according to its annual report.

The NBR official said the reduced tax rate is likely to take effect from the first day of the current fiscal year and the tax that exporters have already paid might be adjusted in line with the new rate.

Export earnings grew 17 percent year-on-year to $17.07 billion in the first five months of the current fiscal year. Exporters fetched $36.61 billion last fiscal year, posting 5.81 percent year-on-year growth, according to data from the Export Promotion Bureau.

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