Finance Minister AMA Muhith has proposed in the new budget that interest income on bonds be exempt from taxation for wage earners, in order to encourage the remittance of foreign currency through legal channels.
Wage earners will enjoy the tax exemption from returns on investments in the Wage Earners Development Bond, US Dollar Premium Bond, US Dollar Investment Bond, Euro Investment Bond, Euro Premium Bond, Pound Sterling Investment Bond and Pound Sterling Premium Bond.
The government has also taken steps to create a vibrant bond market. In order to promote the bond market, Muhith proposed the withdrawal of the existing 5% upfront source tax on interest income from Treasury bonds and Treasury bills.
Muhith expressed hope that ongoing initiatives to expand employment opportunities in traditional markets, diplomatic efforts to explore new destinations, the provision of cheap credit to expatriate workers and measures to improve skills, will substantially increase manpower export and future remittances.
Remittance flows registered 7.1% growth in the first ten months of the current fiscal year compared with the same period of the last fiscal year.
After six years, Saudi Arabia re-opened its labour market to Bangladeshi workers, indicating future growth prospects for manpower export.
According to the budget speech, despite the negative current account balance due to the trade deficit, the overall balance of payments is positive reflecting surpluses in financial and capital accounts as of April this fiscal year.
In effect, the foreign exchange reserve has consistently risen. As of May 27, the reserve stood at $23.7 billion – sufficient to foot about 6 months' import bills.
