The government is likely to cut the source tax on export proceeds for all businesses including readymade garment sector to 0.25 per cent from 1 per cent for the current fiscal year of 2019-2020.
Officials of the National of Board of Revenue said that they had been advised by the government policymakers to prepare a summary paper for the prime minister’s approval to cut export source tax to 0.25 per cent.
The source tax on export proceeds was raised in the budget for FY20 to 1 per cent as the reduced tax rate of 0.25-0.6 per cent for different sectors given for FY 2018-2019 expired in June this year.
The government in January this year cut source tax on garment exports to 0.25 per cent for FY19 after cutting it to 0.6 per cent from 1 per cent in September, 2018.
Source tax on jute exports, however, remained at 0.6 per cent for FY19.
Exporters, especially ready garment makers, have been lobbying the government to reduce the tax to 0.25 per cent after the passage of the budget in parliament in June.
They claimed that the tax cut was needed to fend off the global competitors in the RMG sector amid a rise in gas prices in the country.
NBR officials said that they would soon send a summary for prime minister Sheikh Hasina through the finance ministry for export tax cut.
The source tax cut might be applicable from July 1, 2019.
The officials, however, said that source tax collection from the $40.5 billion-worth export earnings sector would decline, affecting the overall tax receipts, at a time when the revenue board was struggling to meet the revenue collection target.
NBR officials said that it would be a near impossible to achieve Tk 3.25 lakh crore revenue collection target for FY20 given the stagnant business condition in the country and cut in different taxes like source tax and VAT for different sectors.
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