Source tax slashed to 0.25 per cent, effective up to 30 June

Bangladesh on Monday, cut source tax on export proceeds for readymade garments and all other sectors from 1 per cent to 0.25 per cent.

The income tax wing of the National Board of Revenue (NBR) issued a statutory regulatory order in this connection, making the new tax rate effective from 21 October 2019.

The new tax rate will remain effective up to 30 June 2020.

The Government’s move is a consequence of exporters’ growing demand to slash source tax so as to keep Bangladesh’s exports competitive in the global market.

It may be mentioned here that as per the income tax law, the regular rate of source tax on export earnings is 1 per cent, which was reinstated in the budget for the current fiscal year 2019-2020 after the expiry of the reduced tax rate facility on 30 June.

However, the reinstatement of source tax at 1 per cent, met with stiff resistance from the trade bodies especially the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), both of which demanded a cut in the source tax to facilitate exports.