Bangladesh Garment Manufacturers and Exporters Association has been lobbying the National Board of Revenue for extending the special income tax rate facility for readymade garment exporting industry for five more years. The revenue board withdrew the facility of reduced income tax rate at 10 per cent for the sector from the current fiscal year to check income tax evasion by the entreprenuers through shifting of profit from other businesses to export-oriented industries.
Officials of the NBR said that BGMEA has recently written letters to the finance ministry and the revenue board requesting for extending the facility up to June 2019.
RMG exporters are also lobbying at different levels of the government in this connection, they said.
Till the last financial year of 2013-14, the tax at source for apparel item exporters was 0.80 per cent on their export income which was considered as final settlement under some conditions, according to a statutory regulatory order issued by the NBR in 2005.
The conditions include that the revenue board will calculate the annual income of RMG products exporting companies assuming that they paid tax at the rate of 10 per cent on export earnings while their other income will be taxed at the regular rate for companies at 35 per cent.
Currently, the tax at source on RMG export proceeds is 0.30 per cent and the applicable company tax rate is 35 per cent as the NBR withdrew the benefit from the current FY of 2014-15.
A high official of the NBR on Monday told New Age that the revenue board would not extend the facility as it creates a room for tax evasion.
He said that there was a scope for showing much profit from export earnings because of annual income calculation system for RMG exporters as they paid tax at 0.80 per cent but their tax would be assumed at 10 per cent.
Taking the advantage, they used to show their income from other businesses as income from export earnings to evade taxes as income from other businesses is supposed to be taxed at regular rate which is now 35 per cent.
RMG exporters could also legalise their untaxed money in the process, they added.
The scope for showing higher income from export will be reduced significantly as the tax rate has been restored to 35 per cent.
In a letter written to the NBR, BGMEA president said that the RMG sector was passing through a hard time due to price cut of the products in international market, increase of production cost, workers’ wages and compliance costs.
Considering the issues, the revenue board should extend the facility for five more years, the letter stated.
-With New Age input
