Bangladeshi exporters will be levied 0.5 per cent tax at source of their export earnings from the next fiscal as the existing 0.25 per cent tax benefit ends this fiscal, according to tax proposals for 2020-21 introduced by finance minister AHM Mustafa Kamal. However, existing reduced corporate tax benefits for garments and knitwear sectors have been extended for two years to 2022 after the benefit expires on June 30.
Taxpayers in the garments sector would be benefited from the measure, Kamal said in his budget speech in parliament recently.
Apparel manufacturers, who account for more than 80 per cent of the country’s export earnings, currently enjoy 12 per cent corporate tax on incomes, nearly a third of the current corporate tax of 35 per cent for non-listed companies. The rate is 10 per cent for holders of green building certificates.
Export receipts fell by 18 per cent year on year to $31 billion in July-May of the current fiscal over figures during the same period in the previous fiscal, according to Bangla media reports.
However, shipments trebled to nearly $1.5 billion in May from just over half a billion in April this year, according to Export Promotion Bureau data.
Income tax law stipulates that exporters pay a 1 per cent source tax on the proceeds of their exports. But the National Board of Revenue (NBR) cut the rate through notifications on several occasions during the past two years in the face of demands from exporters.
The NBR reduced source tax on export earnings of garment twice in fiscal 2018-19–from 1 per cent to 0.6 per cent in September 2018 and further to 0.25 per cent in January the next year–following requests from garment makers.