RMG makers want to pay reduced source tax from Jul 1
Garment makers have demanded a reduction in source tax on their export earnings to 0.25 percent on a retrospective effect from July 1 this year.
The plea was made after the National Board of Revenue (NBR) on October 21 slashed the source tax on exports to 0.25 percent from 1 percent to help increase the competitiveness of Bangladeshi products in the international market.
In a letter to the NBR on October 21, Bangladesh Garment Manufacturers & Exporters Association (BGMEA) President Rubana Huq said the retrospective effect has not been given in the latest notification regarding reduction of source tax on export receipts.
The apex chamber of the biggest export earning sector said the NBR cut source tax in the years of 2016, 2017 and 2018 and the reduced tax benefit was given with retrospective effect from July 1.
This time it is not given, said the BGMEA letter, while urging the NBR to make this effective giving retrospectivity from July 1.
The garment industry is facing tough time and operational expenses of businesses rose about 30 percent for various factors including falling prices and spiral in wages of workers.
In the last fiscal year, the NBR reduced source tax on apparel twice to 0.25 percent and gave retrospective effect from July 1, 2018. The privilege expired on June 30 this year.
With a view to boosting collections the source tax for garment manufacturers was increased to 1 percent at the beginning of the fiscal year from 0.25 percent the previous year.
And, the tax authority reduced the rate to previous level in the face of demands from exporters without giving retrospective effect.
Taxmen said offering retrospectivity would affect overall revenue collection, which has been sluggish.
At present, apparel makers enjoy 12 percent corporate tax, which is half the lowest corporate tax of 25 percent applicable for listed companies in the stock market.
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