The Bangladesh government plans to increase tax rate at source on exporters’ earnings to 0.5 per cent tax from the existing 0.25 per cent. The government has also extended the existing corporate tax benefits for garment and knitwear for another two years to 2022 after it expires on June 30.

Apparel manufacturers in the country currently enjoy 12 per cent corporate tax on incomes, nearly a third of the current corporate tax of 35 per cent for non-listed companies. According to recent media reports, the export earnings of these manufacturers declined by 18 per cent year on year to $31 billion in July-May of the current fiscal over figures during the same period in the previous fiscal.

However, their shipments trebled to nearly $1.5 billion in May from just over half a billion in April this year, according to Export Promotion Bureau data.

Though the income tax law in the country stipulates that exporters pay a 1 per cent source tax on the proceeds of their exports, the National Board of Revenue (NBR) cut the rate on several occasions during the past two years in the face of demands from exporters.