Tax Cut On Rmg Exports
Govt to lose Tk 2,000cr in revenue in 18 months
Reduction of tax at source on export of clothing items to 0.30 per cent from the existing 0.80 per cent will cost at least Tk 2,000 crore in revenue as the government has offered the benefit for one and half years, according to the estimation of the National Board of Revenue. According to finance ministry officials, the government has already decided to offer the proposed tax waiver to apparel sector from January 1, 2014 to June, 30, 2015 considering the shocks the sector suffered during the later part of 2013 due to political unrest centring holding of the national elections and hike in salaries of workers.
In a meeting on January 6, the finance ministry decided to lower the tax on apparel exports to 0.30 per cent following a demand of apparel exporters, they said.
The ministry initially decided to set the tax at 0.40 per cent and asked the revenue board to take necessary steps for implementation of the decision.
‘Following the ministry’s first decision, the NBR assessed that the government would lose Tk 1,600 crore in revenue if the benefit is given at 0.40 per cent up to June, 30, 2015,’ a senior NBR official told New Age on Monday.
Revenue loss will increase further and likely to stand at around Tk 2,000 as the government has cut tax rate to 0.30 per cent, he said.
The facility will be implemented from the date of issuing statutory regulatory order, he said adding that any benefit given in back date would cause problems in repayment of paid taxes.
After the offering period, the existing tax rate at 0.80 per cent will be restored again, he said.
‘We are yet to get any instruction from the ministry to reduce the tax to 0.30 per cent,’ another official said.
He said, ‘The revenue board will have to take approval from the prime minister for implementation of the ministry’s decision regarding reduction of tax at source.’
After getting the instruction from the ministry, the revenue board will take step to issue statutory regulatory order in this connection, he said.
It will take some time to complete legal procedures, he added.
The Bangladesh Garment Manufacturers and Exporters Association has been demanding for reduction of tax at source to 0.25 per cent permanently since long.
In a number of meetings with the finance minister, the apparel exporters claimed that business activities reduced by 10 per cent due to severe disruptions in transportation amid prolonged political turmoil in the country.
Cost of doing business has also increased due to pay-hike of workers, they pointed out.
-With New Age input
