The National Board of Revenue (NBR) yesterday reduced the source tax on export proceeds for businesses, except for jute goods makers, to 0.25 percent from 0.60 percent.
The tax privilege came in the face of demand from industries, particularly from apparel manufacturers.
“We have reduced the withholding tax on export earnings to enable apparel makers to implement new wages for workers,” said an official of the tax administrator.
The reduction comes three months after the tax collector slashed advance or source tax on exports of readymade garments, except jute goods, to 0.60 percent from 1 percent in the budget for 2018-19 in a bid to increase revenue collection.
The new source tax would be applicable from July 1, meaning that advance tax collection from the $36 billion-worth export earnings would decline, further reducing overall tax receipts.
Tax collection growth slowed to 7 percent in the last July-November period from 16 percent a year ago.
Some taxmen attributed the slowdown to various tax and VAT waivers awarded to sectors such as LNG, shipping and stock brokers.
For instance, the NBR would miss out about Tk 12,000 crore in revenue for waiving import tariffs on liquefied natural gas (LNG) to enable industries to bring down their costs and VAT on ship imports.
In the July-November period, the NBR collected Tk 79,732 crore, which is 21.6 percent or Tk 21,973 crore short of the target.
The tax collector will have to log Tk 216,496 crore within the remaining seven months to achieve the collection goal of Tk 296,201 crore of the fiscal year ending in June.
Of the three main sources of tax, collections from income tax grew 10 percent year-on-year to Tk 21,992 crore in July-November of the current fiscal year. Customs logged 6 percent year-on-year growth in revenue to Tk 26,104 crore in five months to November this fiscal year.
Collection of VAT, the biggest source of revenue from domestic businesses, increased 5 percent year-on-year to Tk 31,635 crore until November of the fiscal year. The July-November collection growth was almost half of the NBR's annual average collection growth, according to NBR data.