Apparel exporters may see a large hike in the tax on their export earnings from the upcoming fiscal year. Indications have it that the tax rate may be fixed at 1.5 per cent-a fivefold increase from the existing 0.30 per cent-in the budget for the FY 2015-16. The new national budget will be proposed in parliament on June 4 next. Tax officials said they had lost Tk 20 billion in tax revenue in the sector since April last year, after the government cut down the tax from 0.80 per cent to 0.30 per cent. Also, there might be no special tax rate for the apparel exporters from next year. The government is likely to maintain the normal tax rates for the sector. In the budget for the current FY, the government has withdrawn the special tax rate of 10 per cent. Apparel exporters’ annual tax assessment is now being conducted at the regular rate of 35 per cent, in case of company. The tenure for the special tax rate for readymade garment and knitwear exporters expired on June 30, 2014. Since 2005 until June 30, 2014, taxmen had calculated tax at an estimated rate of 10 per cent at the time of annual tax assessment as part of measures for helping the main export industry come of age and compete on the global market. Finance Minister AMA Muhith speaking at a discussion meeting in the city last Saturday said the apparel industry is now mature enough to pass on some benefits to the government, indicating a hike in tax rate for the industry. The RMG and knitwear exporters are enjoying a pared-down rate of 0.30 per cent in paying tax at source on their export earnings. The taxmen consider it as finally paid tax-known as final settlement-on their entire incomes from export. Tax officials said it would be difficult for the revenue board to achieve the high target for income-tax collection next year unless the government spreads its tax net over the potential sector. “Apparel exporters have enjoyed a lower rate of tax at source for a long time. Time has come to raise the tax rate on the export earnings for mobilization of internal revenue in the next FY,” said a number of the officials. The move evoked a strong plea from the exporters’ side for the government to reconsider the raise at this point of time. Exporters Association of Bangladesh (EAB) president Abdus Salam Murshedy urged the government not to increase tax at source in the upcoming fiscal as the sector is struggling to hold its competiveness. “We are facing different challenges to compete on the international market as competitive edge of the apparel exporters is on the decline,” he said. Bangladeshi apparel products have witnessed 1.0 to 2.0 per cent export growth while it is attained 15 to 20 per cent by the global competitors, he pointed out. He said new wages, increase in utility bills, bank interest rates, depreciation of the euro, higher oil prices are the major challenges facing the exporters in addition to the political impasse.
Source: https://www.thefinancialexpress-bd.com/2015/05/26/94144
