To help maintain export competitiveness amidst the COVID-19 pandemic, Bangladesh’s apex garment makers’ body, the BGMEA (the Bangladesh Garment Manufacturers and Exporters Association) has demanded reduction in the source tax on cash incentive against export earnings so as to support the readymade garment sector. According to media reports, in a letter written to the Chairman of the National Board of Revenue (NBR), Abu Hena Md. Rahmatul Muneem, BGMEA President Dr. Rubana Huq while underlining the apparel sector’s suffering from the adverse impacts of the pandemic, requested the NBR to reduce the source tax (also known as tax deduction at source) on cash incentive from the current 10 per cent to 5 per cent. Maintaining that there is uncertainty on receipt of export payments from many shipments owing to many buyers from countries such as China, USA, UK and other European nations declaring bankruptcy, the BGMEA President reportedly said that exporters were also finding it difficult to get cash incentives from the central bank (Bangladesh Bank) subject to non-receipt of export payments from foreign buyers, while also having to deal with liquidity crisis and other issues. As such it will be logical to reduce the tax rate to 5 per cent like in previous years, reportedly underlined the BGMEA chair while adding given the current situation, if tax is deducted at the rate of 10 per cent on cash incentive, it would be difficult for apparel exporters to maintain competitiveness in the global market.
