Bangladesh sets Source Tax at 0.7%

Giving in to the demands of the exporters including garment manufacturers, Bangladesh Government has set the tax at source on export earnings at 0.7 per cent, as against the proposed 1.5 per cent.

Bangladesh Parliament recently passed the Finance Bill paving way for the lowered Source Tax along with some changes. Besides, the proposed 15 per cent VAT has also been fully withdrawn on the rent or place and establishments of the ICT-related service organisations. Finance Minister AMA Muhith moved the Finance Bill, which was passed by voice vote. The Source Tax in the outgoing fiscal year was 0.6 per cent.

Also Read – BGMEA urges Govt. not to raise tax at source

On June 2, the Finance Minister proposed to set the tax at source on export at 1.50 per cent from existing 0.60 per cent for all the exporters. Ever since, leading business chambers and trade bodies have been pressing the Government to reduce the tax rate or keep it unchanged at 0.60 per cent for the next fiscal year, considering the interest of exporters.

Citing various issues that have ‘plagued’ the RMG (readymade garment) sector in Bangladesh, the apex garment manufacturers’ body in the country, Bangladesh Garment Manufacturer and Exporters Association (BGMEA) had called upon the Government not to raise the tax at source in the apparel sector and expressed intent to sit with the Prime Minister, Commerce Minister and Finance Minister on the issue.

Also Read – Government of Bangladesh increases tax at source on RMG exports

As per the earlier proposed tax rate of 1.50 per cent, the Government was expected to get BDT 4,000 crore from the garment sector. However, the revenue amount will now go down as the rate has been slashed.