Export-oriented industry owners, except those of jute mills, were given large tax benefits for the second time in the first eight months of the current fiscal. From now on the owners will have to pay a mere 0.25 per cent tax at source for exporting any item except the jute products, a circular issued by the Internal Resources Division (IRD) on Wednesday said
The rate was reduced to 0.60 per cent from one per cent in September.
The industrialists can avail the new tax benefit until 30 June. After that, the tax will to revert to its original one percent.
Owners of the readymade garments factories will benefit the most from this new order since more than 83 per cent of the export items are the RMG products.
The owners of general RMG factories will have to pay 12 per cent corporate tax, which is 10 per cent for owners of green factories until June this year.
This new tax benefit will boost profits for the owners, who claimed this will be an incentive for the export sector, leading to an increase in exports.
The decision, however, will decrease the government’s tax revenue, experts said.
“The readymade garments sector is doing very well and exports are also increasing while many other sectors suffered negative growth. That is why the RMG sector does not need any new tax-holiday,” said finance adviser to a former caretaker government ABM Azizul Islam.
Mirza Azizul thought the government took the decision under the pressure from the industrialists.
The exporters have been paying tax at the source for a long time. According to the income tax regulations of the National Board of Revenue (NBR), the tax at source for the RMG sector is one per cent.
For the last three years, though, the government has been issuing circulars decreasing the source tax to 0.70 per cent for the RMG exporters from July to June each year. The benefit was not given in the current fiscal year.
In his post-budget reaction, president of country’s apex apparel body, Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Siddiqur Rahman told newsmen he will ask the top leadership of the government to bring down the tax at source and corporate tax rate.
The government then decreased the source tax in September first and made another change on 2 January.
BGMEA vice president Mohammad Nasir told Prothom Alo that this tax benefit will help the sector as the price of RMG products has been continuously decreasing in the international market while the wage of the workers has increased.
“Everyone wants facilities, but cannot always show success. The RMG sector can avail this benefit as it has been contributing significantly to exports and in socio-economic development,” he added.
Nasir also put emphasis on increasing the efficiency for competing with other players of the market.
The commerce ministry has fixed an export target of USD 32.68 billion RMG products in the current fiscal.
NBR officials said they have a target of realising Tk 20 billion as tax at source from the sector. The revenue may decrease by Tk 4-5 billion if the relax in tax, they added.