The government on Wednesday retained tax at source of 1 per cent on export earnings from readymade garment sector for the next fiscal year 20217-2018 beginning Saturday. Corporate income tax for apparel manufacturers, however, was lowered to 12 per cent from 15 per cent set in the proposed budget placed at the national parliament on June 1. The rate of corporate tax for green factories was reduced to 10 per cent from the proposed 14 per cent. The Finance Bill-2017 was passed by the parliament on Wednesday incorporating the changes.A number of changes were also made in other proposals related to value-added tax, income tax and customs duty that finance minister Abul Maal Abdul Muhith proposed in the budget proposals on June 1. Muhith in his final budget speech on Wednesday placed a set of amendments to the proposed budget. He said that the RMG exporters would have to pay 1 per cent tax at source in the new fiscal year.The rate is supposed to be 1 per cent in FY2017-2018 after exporters paid the tax at the rate of 0.7 per cent in FY17 as the National Board of Revenue reduced the rate for the year through a special statutory regulatory order. In the outgoing FY 2016-2017, the rate of corporate income tax for the apparel sector is 20 per cent but Muhith in the budget proposals reduced the rate to 15 per cent before cutting further to 12 per cent on Wednesday.The parliament also decided to impose VAT at reduced rate on spices like pepper, turmeric and coriander based on tariff value.It also waived the meditation service from paying value-added tax for the next two years. Computer, cellular phone and their spare parts will also be included in the VAT-exemption list as these devices are being produced in the country. The tax benefits for ship breakers and recyclers will also be continued in the next fiscal year.Motorcycle industry will enjoy VAT exemption at local manufacturing stage, according to the approved finance bill.Import of computer software by Microsoft Bangladesh Limited on which no customs duty is applicable will be VAT free, Muhith said.Supplementary duty on refrigerator manufactures has been lowered to 20 per cent from the proposed 30 per cent. The parliament also waived the import of composite LPG container from payment of VAT to encourage use of LPG gas in the country. On the other hand, VAT will be in place in import of iron-made LPG container to protect the local industry. The government also withdrew the additional customs duty imposed through the proposed budget on motorcycle industry under progressive manufacturing agreement. The government also reduced duty on import of raw materials and other elements for motor cycle and motor car production following request of Japan Embassy and Nitol Niloy Company as they informed the government that they would start production of motor cycle and motor car soon in the country. Additional import duty on solar panel proposed by Muhith in his budget proposals has also been withdrawn as the sector is still dependent on import.
