Source tax on exports slashed to 0.25pc

The National Board of Revenue yesterday 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.

The move followed demands from exporters after the rate of source tax on export proceeds rose to 1 percent from this fiscal year.

Taxmen were unwilling to extend the privilege of reduced source tax on exports to increase collection from exporters to attain their higher tax targets.

The tax authority reduced advance or source tax on export earnings of garment twice last fiscal year -- from 1 percent to 0.60 percent and then to 0.25 percent -- in the face of demands from apparel markers.

Apart from garment, jute goods were enjoying 0.60 percent withholding tax on export proceeds since July 1, 2016. The reduced rate ended on June 30 this year.

The NBR in its yesterday’s notification extended 0.25 percent source tax benefit to jute goods makers too.

Latest data on collection of tax at source on export earnings are not available.

The tax authority got Tk 2,136 crore in fiscal 2016-17 from the source, up 17 percent from a year earlier, according to NB.

Because of the reduction, collection of source tax from exports is likely to reduce this year.