The government is likely to reduce the tax at source to 0.80% from the proposed 1% for the fiscal year 2015-16 for all export oriented industries including the readymade garment.
Officials said the proposed tax could be slashed due to intense opposition by different quarters including the RMG industry people.
“The government has been facing huge pressure from different sectors’ people including those of apparel industry to cut the proposed tax at source rate,” said a finance ministry official asking not to be named.
He said the tax could be cut to 0.80% from the proposed 1%, which would be treated as the final tax liability for all export-based industrial sectors.
Finance Minister AMA Muhith, in his budget speech on June 4 at Parliament, proposed the uniform rate of tax.
Currently, the clothing industry owners pay 0.30% tax at source, while the other export-oriented industries including jute products, frozen foods, leather goods and packed foods pay 0.60% tax.
“The government should treat tax at source as the final tax liability for all export-based sectors, if it is set at 0.80%,” Shahidullah Azim, vice president of Bangladesh Garment Manufacturers and Exporters Association, told the Dhaka Tribune.
He said the country’s export-oriented sectors, especially the RMG, were facing difficulties to run the business as euro was devalued against dollar and supply chain was broken during three-month political unrest since the beginning of this year.
“If the proposed tax at source is implemented, it will increase production cost and reduce competitiveness in the global market,” said the RMG industry association leader.
Shafiul Islam Mohiuddin, senior vice president of FBCCI, also urged the government to change the tax at source proposal in the budget taking the country’s present situation into account.
The country’s apex trade body leader said if the export-oriented sectors could flourish, the government would get more tax indirectly.
He stressed that many small and medium entrepreneurs, which were struggling to survive, needed support from the government.
