Currently, the sector enjoys 0.25% source tax for the outgoing fiscal year
Tax at source for the country’s apparel sector, the $34 billion industry, increased to 0.5% from 0.25% for the 2020-21 fiscal year.
Currently, the sector enjoys 0.25% source tax for the outgoing fiscal year.
“Exports of goods and services, including that of RMG, have faced a downturn due to the outbreak of the Covid-19 pandemic. I, therefore, propose to reduce the rate of withholding tax on export proceeds as a part of extending overall support to our export sector,” said Finance Minister AHM Mustafa Kamal on Thursday while announcing the national budget for FY2020-21 in the parliament.
The existing rate of collecting withholding tax on all sorts of export proceeds including that of RMG as stipulated in the Income Tax Ordinance is 1% that has further been reduced through an SRO, which continues to be in force till June 30, 2020, said Kamal.
I propose to amend the Ordinance to fix the rate of withholding tax on all sorts of export proceeds including that of RMG at 0.5% instead of the existing rate of 1%, he added.
However, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) had demanded to keep the rate unchanged.