DHAKA, Oct. 22 (Xinhua) -- Bangladesh's tax collection body, the National Board of Revenue (NBR), has reduced the source tax on export proceeds for all sectors from 1.0 percent to 0.25 percent to boost mainly ready-made garment (RMG) export competitiveness.
A senior NBR official told Xinhua Tuesday that the tax collection body issued an order on Monday with immediate effect.
In line with the order, the official who declined to be named said the reduced source tax rate will remain till the end of this fiscal year (July 2019 to June 2020).
Bangladeshi garment exporters, among others, have long been demanding for source tax reduction, he said.
Due to cut in the source tax rates, NBR will reportedly lose approximately 20 billion taka as source tax this year from the garment sector, which contributes more than 80 percent of the total export income of the country.
The official, however, said the tax reduction decision was made in the wake of sluggish growth in export income in recent months.
Bangladesh's export earning in the first quarter of the current 2019-20 fiscal year fell 2.94 percent year-on-year to 9.65 billion U.S. dollars.
Of total earnings, Bangladesh's Export Promotion Bureau (EPB) data showed the country's income from ready-made garment items, including knitwear and woven, stood at 8.06 billion dollars during July-September period of the current fiscal year.
In the first quarter of the current 2019-20 year, the EPB data showed, knitwear garment export growth declined 1.64 percent to 4.17 billion dollars, while woven garments fell 0.87 percent to 3.89 billion dollars, comparing with the same period of last fiscal year.
In wake of major ready-made garment export slowdown, the EPB data showed overall export income for the last month was 2.92 billion dollars, about 230 million U.S. dollars lower than that in the same month a year ago.
Bangladesh set its export target in 2019-20 fiscal year at 45.50 billion dollars, including 38.20 billion dollars from ready-made garment products. (1 U.S. dollar equals to about 84 taka)