An increase in the tax rate, especially at a time when the cost of production has surged, might make a dent in their working capital, reducing the sector's competitiveness in the global market, said the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and the Exporters Association of Bangladesh (EAB) in the letter.
Economist Ahsan H Mansur, however, disagreed with the argument, saying the proposal to raise the source tax rate is reasonable as the country’s exports, including those of readymade garments, are in a somewhat advantageous position now.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said the government is offering incentives for exports. Besides, exporters are earning more because of the recent depreciation of the local currency against the US dollar. In these circumstances, raising the source tax is logical, he told a domestic newspaper.
According to the latest data released by the Export Promotion Bureau (EPB), Bangladesh's export income stood at over $47 billion in the first 11 months of fiscal 2021-22, with a year-on-year growth of 34 per cent. The figure is expected to cross the $50 billion mark by the end of the year.
In fiscal 2020-21, Bangladesh's total export income was $38.75 billion, while $193.7 million or Tk1,666 crore was collected in advance income tax on export revenue.
The rate of income tax is not the same for all exporters, but the source tax is levied at the same rate on all sectors in this fiscal.
ALCHEMPro News Desk (DS)
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