The government has cut the rate of source tax on export proceeds for all businesses including readymade garment sector to 0.25 per cent from one per cent for the current fiscal year 2019-2020, report agencies.
The Income Tax wing of National Board of Revenue on Monday issued a statutory regulatory order signed by NBR Chairman Md Mosharraf Hossain Bhuiyan. The new source tax will come into force from October 21. The source tax rate on export proceeds was raised in the budget for FY20 to 1 per cent from the rate of 0.25-0.6 per cent of the FY 2018-2019.
Exporters, especially the RMG makers, have been lobbying with 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 make Bangladesh RMG products competitive in the global market.
NBR officials said this decision will have a negative impact on revenue collection as tax mobilization from the $40.5 billion-worth export earnings sector would decline.