The government is going to cut withholding tax and corporate tax for garment exporters in what can be viewed as yet another pullback by the revenue authority from its intent to collect higher tax from the sector.Last fiscal year, the sector earned $30.61 billion, which is 83.5 percent of the total export receipts for the year.With a view to boosting collections the source tax for garment manufacturers was increased to 1 percent from 0.7 percent and corporate tax raised to 15 percent in the budget for fiscal 2018-19.But now a decision has been taken to slash the source tax for garment makers to 0.6 percent, said a senior NBR official requesting anonymity. A notification would be issued in this regard soonThe corporate tax rate is likely to be reduced to 12 percent from 15 percent. And for those manufacturing clothes in green buildings, the corporate tax rate is likely to be 10 percent, as in the previous fiscal year.“This will provide relief to the factories that are struggling to survive amid the rising costs of doing business and production,” said Mohammed Nasir, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).Asked from where the government will collect tax to meet its increased collection goals to develop public infrastructure, he said the garment sector contributes to the economy and helps in poverty alleviation.“Instead of measuring its direct contribution only, its indirect contribution to the nation should also be noted,” he said, adding that the garment makers had demanded complete waiver from source tax. The latest data on source tax collection is not available.In fiscal 2015-16, the tax authority logged in Tk 1,484 crore as source tax mainly from garment shipments.The NBR got the highest amount of source tax on exports in fiscal 2013-14, when Tk 2,080 crore was collected, according to its annual report.Stay updated on the go with The Daily Star Android &iOS News App. Click here to download it for your device.
