The government has bowed to the pressure of readymade garment manufacturers by agreeing to reduce significantly tax on apparel exports.
The national board of revenue officials told New Age that the ministry of finance directed them to lower the tax at 0.3 per cent from existing 0.8 per cent.NBR, which is going to face a revenue shortfall of around Tk 13,000 crore in the current fiscal, has also asked to make the directive effective from January 1, 2014.
They said the new rate would cost the revenue board more than Tk 1,000 crore in revenue.
Finance minister AMA Muhith last month decided to lower the tax to 0.65 from 0.8 per cent following repeated demands by the RMG factory owners.
Officials said the RMG manufacturers and exporters expressed disappointment with the rate. They put pressure on the government to lower it further, said the officials.
The apparel exporters have been pressuring the government for incentives citing slow-down in business activities due to prolonged political unrest.
In a number of meetings with the finance minister, apparel exporters claimed that business activities reduced by 10 per cent due to severe disruptions in transportation.
However, the export figure of November 2013 did not support their claim.
The country’s RMG exports grew 20.73 per cent in July-November of the current financial year despite political turmoil.
The overall export earnings of the country also grew by 18.02 per cent to $11.96 billion in July-November of the FY14 from $10.13 billion in the same period of the FY13.
RMG exporters said export figure in November did not show the actual picture of the sector. They said adverse impact of the political unrest would emerge in March.
They said their demands including arrangement of a special loan package on low-interest for paying workers’ wages and blocking of term loans without any interest for next two years were legitimate.
They also demanded relax of rules of loan classification for two years and waiving of additional charges at Chittagong port.
Critics said pressuring the successive governments for additional incentives was a common practice by the businessmen who had forecast that the readymade garment exports would fall drastically due to phase-out of quota facility Bangladesh enjoyed from the developed countries till 2004.
But there was little impact of the phase-out on the country’s RMG exports.
-With New Age input
