Finance Minister AMA Muhith approved a proposal on reducing the existing 0.80 per cent tax at source to 0.60 per cent for export earnings from apparel sector, sources said.
Muhith’s approval came on Monday on the back of a proposal of Finance Division, apparently to pacify the apparel makers as they had submitted a good number of demands to the finance ministry to offset their losses to be caused due to workers’ wage hike.
The exchequer would be deprived of around Tk 500 crore per annum for easing the tax rate, which has been treated as ‘final settlement’ by the taxmen, a high official in the National Board of Revenue said.
However, Muhith did not consider other demands of Bangladesh Garments Manufacturers and Exporters Association, the platform for apparel makers.
Recently, BGMEA put forward a list of demands to Prime Minister Sheikh Hasina and Muhith, saying if the demands are not met the very existence of the garment sector would be jeopardized.
The BGMEA’s demands include lowering the tax at source to 0.25 per cent from existing 0.80 per cent on RMG exports, introducing special exchange rate between the Taka and the US Dollar for apparel exporters, allocation of a special fund for purchase of land at the proposed RMG village in Munshiganj and introduction of subsidised food items for the workers.
In the last fiscal year, the RMG’s export stood worth US$ 21.51 billion.
A government-sponsored board recently recommended Tk 5,300 as minimum wage for entry-level workers in the garment sector, which the government approved with minor changes by keeping the minimum threshold unchanged.
The BGMEA former President Anwar-Ul-Alam Chowdhury (Parvez) said the reduction in tax-at-source is very insignificant considering the huge legitimate demands of the apparel exporters.
‘The minimum pay for workers has been raised above 77 per cent from the current level of Tk 3,000. If the exporters are not given at least 10 per cent cash incentive and tax reduced to 0.25
per cent, the largest export earning sector of the country will go to the brink of collapse,’ Parvez told New Age on Monday.
Currently, apparel exporters using local yarn get 5 per cent cash incentive on their export receipts, enjoy 2 per cent cash incentive from export earnings derived from countries other than those of the US, EU and Canada.
Officials in the finance ministry said they would soon ask the revenue board to act as per the latest government decision so that scheduled banks are directed by the NBR to deduct tax at the rate of 0.60 per cent from the export receipts of apparel items.
-With New Age input
