The government has cut source tax on export earnings further for readymade garment and other sectors to 0.25 per cent from 0.60 per cent for the current fiscal year.National Board of Revenue on Wednesday issued a statutory regulatory order amending its previous order on the issue and gave the benefits from July 1 with retrospective effect. NBR made the decision following an instruction of government high-ups which came under pressure from RMG makers and exporters, officials said.They said that the benefit would remain effective for the current fiscal year 2018-2019 to end on June 30. Exporters will be able to adjust the previous tax paid at higher rate.Source tax reduction, however, will not be applicable for earnings from jute and jute goods export. Earlier, in September 5, NBR for the first time reduced the tax rate for export-oriented sectors to 0.60 per cent from 1 per cent reinstated in the budget for the current fiscal year due mainly to pressure from Bangladesh Garment Manufacturers and Exporters Association.According to NBR order, banks will deduct the tax on export proceeds of knitwear and woven garments, terry towel, carton and accessories of garments industry, frozen food, vegetables, leather goods, packed food and any other items at the time of crediting the proceeds to the account of exporters. A senior NBR official said that apparel exporters, mainly BGMEA, was demanding reduction of the tax even after the government cut the tax first time in September.The pressure was mounted after October before the national polls pleading implementation of new minimum wage board which came into force in December for workers, he said.BGMEA in a letter to NBR demanded the cut as an incentive package to implement the new minimum wage.Reduction of the tax is also vital to keep the sector competitive in global market, it said. According to NBR estimate, the government’s revenue earnings from export sector will come down by at least Tk 3,000 crore due to both reductions of the tax rate.A senior NBR official said that export tax for jute would remain unchanged at 0.60 per cent set by a separate SRO few years back and the benefit was scheduled to end on June 30.NBR did not reduce the export tax for jute as neither the exporters from the sector made such demand nor the government gave any instruction on the issue, he said. NBR can lower any tax only if it gets any application from a sector or instruction from policy makers.
