The government is now set to reduce the proposed tax at source for export-oriented industries for fiscal year 2016-17 following request from the stakeholders and exporters. The tax at source on export bill has been proposed to increase to 1.5 per cent, from the existing 0.60 per cent, in the new budget placed in parliament on June 02 and presently under discussion.Axe hangs over tax at source for exporters Official sources said the tax authority is considering fixing the rate at 1.0 per cent for the upcoming fiscal year (FY).
They said in the income tax ordinance the tax rate for export-oriented sector is 0.80 per. The government every year revises the rate through issuing Statutory Regulatory Order (SRO). Last year, the tax rate for apparel exporters was 0.30 per cent while 0.60 per cent for other sectors. Although exporters have been demanding revision in both corporate tax and tax at source in the Finance Bill 2016, only reduction in the tax at source is under consideration of the government. With the increase in the tax at source, the income tax wing estimated Tk 20 billion in additional revenue in FY 2016-17. “The revenue projection will fall short if the government reduces the rate of tax at source,” said one official. According to the sources, it would be wise to set tax at 1.0 per cent for the export-oriented sector as wide gap of tax-at-source rate and corporate tax rate helps accumulation of undisclosed money in this sector. The apex chamber-the Federation of Bangladesh Chambers of Commerce and Industry-Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Exporters Association of Bangladesh (EAB), Bangladesh Textile Mills Association (BTMA) and Bangladesh Frozen Foods Exporters Association (BFFEA) demanded of the government to lower the source tax on exports. The NBR received Tk 13 billion in tax at source from export-oriented sectors in July-April period. In 2014-15, the receipt came to Tk 10.65 billion.
