Govt bowing down to RMG exporters’ pressure for tax cut (Bangladesh)

The government is likely to consider cutting down corporate tax on the export-oriented readymade garment sector in the current fiscal year because of intense lobbying by the exporters.

Finance minister AMA Muhith on Sunday assured the businessmen of considering their demands including lowering existing rate of 35 per cent corporate tax during a meeting with them at his secretariat office.

Although Muhith agreed to meet the demand from the next fiscal year, he finally agreed to do so in the current fiscal year due to repeated urging by the businessmen.

Commerce minister Tofail Ahmed and industries minister Amir Hossain Amu attended the meeting.

Earlier, the National Board of Revenue opined in a summery for the finance minister that it would be impossible to lower the rate from the middle of the current fiscal year as many of the exporters have already submitted their returns at the regular corporate tax rate of 35 per cent.

The NBR may positively consider the demand from the next fiscal year of 2016-2017 though the businesses demanded a revival of the facility with a retrospective effect from July 2014.

Tofail Ahmed said during the discussion that demands by the RMG sector leaders should be addressed.

The RMG sector was affected due to political programme in 2014, collapse of the Rana Plaza in 2013 and financial crises in Europe, he said.

He said he had been under intense pressure from the businessmen for the last four months to recommend their pleas to the finance minister.

The government raised the corporate tax to 35 per cent for the RMG exporters from 10 per cent in 2014-15.

The hike in tax rate, however, will not increase the tax burden of the export-oriented RMG factories as 35 per cent is only used in calculation purpose.

Currently, the apparel exporters pay only 0.60 per cent tax at source on export proceeds, which is considered as final settlement and in their tax files their profit is calculated assuming that they have paid tax at the rate of 35 per cent.

Leaders of Bangladesh Garments Manufacturers and Exporters Association, Bangladesh Knitwear Manufacturers and Exporters Association, Bangladesh Textiles Mills Association also demanded for cancellation of third party audit for release of cash incentives. Earlier, BGMEA in a letter.