6 years ago

Govt cuts source tax to 0.6pc for all exporters

Corporate tax 12pc for RMG

Photo collected from internet has been used for representational purpose only
Photo collected from internet has been used for representational purpose only

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The government has decided to reduce both source tax and corporate tax for all exporters to support them to stay competitive in the international market.

The source tax will be 0.6 per cent for exporters of all sectors, including those of readymade garments (RMG), leather, jute and frozen foods.

Besides, the corporate tax rate will be 12 per cent for apparel exporters. However, the rate will be 10 per cent for apparel factories having green building certification.

In the budget for the current fiscal year (FY), 2018-19, the source tax for exporters was increased to 1.0 per cent from 0.7 per cent.

Corporate tax rate for apparel exporters was also adjusted upward to 15 per cent, and it was 12 per cent for apparel exporters having green building certification.

A senior official of the National Board of Revenue (NBR) said the reduced tax rates will come into force with retrospective effect from July 01, 2018.

"Two Statutory Regulatory Orders (SROs) in this regard are now in the Ministry of Law for vetting."

The decision on reduction of tax rates comes following instruction of the government high-ups, after one and a half month of imposition of the existing rates as per the budgetary measures, he added.

Meanwhile, many of the banks have already deducted tax at source at 1.0 per cent from export proceedings, as the measures came into effect on July 01, 2018.

Responding to the issue, the NBR official said the paid tax at source will be adjusted with the next export bills as per the government's latest decision.

Officials said the rate of source tax was increased to 1.0 per cent following the expiry of validity of a SRO on June 30, 2018, mentioning the special rate of 0.7 per cent.

The finance minister, in his budget speech for FY 2018-19, said RMG industry is playing an important role in generating employment and fostering economic growth of the country.

He also said the government is offering special tax incentives to the sector considering its contribution.

The government has set US$ 44 billion earning target by exporting goods and services in this FY.

In FY 2017-18, the country's export income recorded a moderate growth of 5.81 per cent to $ 36.66 billion, according to the Export Promotion Bureau (EPB) data.

Apparel, jute and leather sectors together fetched about $ 32.71 billion in last FY.

Of the sectors, RMG export earning posted an 8.76 per cent growth to $ 30.61 billion.

Export of leather footwear grew by 5.33 per cent in last FY compared to that of the previous year. However, total export earning from leather and leather products fell by 12.03 per cent.

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