The National Board of Revenue is planning to backtrack from its earlier stance of not reinstating a facility of tax calculation at reduced rate for the readymade garment exporters following heavy pressure and lobbying by the businessmen from the sector, officials said. The facility of income tax calculation at reduced rate of 10 per cent for the RMG exporters might be revived from July 2016 as part of budget preparation, they said. The revenue board, however, turned down to accept the proposal of the exporters in the middle of the fiscal year as the businesses demanded a revival of the facility with a retrospective effect from July 2014. The officials also said that the NBR had already sent a summery to the finance minister, Abul Maal Abdul Muhith, explaining the overall situation and demand by the RMG exporters and sought his instruction on arranging a tripartite meeting with him on the issue. The revenue board in June 2014 withdrew the 10-per cent tax calculation benefit for the RMG exporters and restored normal tax calculation system where the tax rate is 35 per cent to check tax evasion by the exporters through shifting profit from other industries to export earnings. Under the facility, since 2005 the taxmen would calculate total income of RMG product exporting companies assuming that they paid tax at the rate of 10 per cent on export proceeds though they actually paid the tax up to 0.80 per cent which was considered as final settlement that meant they needed not to pay any additional tax on export earnings. Currently, the NBR deducts tax at source at the rate of 0.60 per cent on export proceeds of the RMG sector. The rate of income tax on other income of the companies is 35 per cent. The RMG exporters, taking the advantage of reduced tax rate, could show several times higher income from export earnings than actual ones, NBR officials said. Even, many could evade tax on income from other sectors where 35 per cent tax was applicable through shifting that income to export earning account, they said. They could also legalise their untaxed money in the process, they said. There is, however, no impact on tax collection from export earnings at whatever rate is considered for calculation purpose, they said. Scraping the tax calculation method has shrunk the scope as they will be able to show much less income as export earnings than they previously could, officials said. Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Knitwear Manufacturers and Exporters Association have continuously been lobbying the finance ministry and the revenue board for reviving the benefit for the next 10 years. They also sought the benefit with retrospective effect from July 2014. In November, the BGMEA in a letter to the finance minister claimed that entrepreneurs would have no fund for reinvestment if the export earnings were calculated based on the income tax at 35 per cent. In the context, the revenue board and the BMGEA hold several meetings on the issue. Officials of the revenue board said that they had always been against reinstating the provision. Now, the board is considering the demand from exporters positively, they said. The board sought instruction from the finance minister for holding a meeting with him and BGMEA leaders for taking a decision on the issue, they added.
