The National Board of Revenue is set to issue a statutory regulatory order reducing tax at source on export of apparel items to 0.30 per cent from the existing 0.80 per cent for 15 months, officials of the NBR said.
‘After getting approval from the prime minister, Sheikh Hasina, last week, the revenue board on Sunday sent a draft of the SRO to the law ministry for vetting,’ a senior official of the NBR told New Age.
The SRO will be issued as soon as the law ministry sends back the draft, he said, adding that it might take a few days.
Though clothing exporters sought the benefit with retrospective effect from January, the tax waiver will be effective from the date of issuing the SRO, he said, adding that it would cause complexities in repayment of paid taxes if the waiver is given in back date.
After the offering period, the existing tax rate at 0.80 per cent will be restored again, NBR officials said.
The tax benefit is being given as part of an incentive package for RMG sector to help them recover their losses incurred during political turmoil in the last few months centring holding of the national elections and hike in salaries of workers.
In January, the finance ministry decided to lower the tax following a demand of apparel exporters.
According to NBR assessment, reduction of tax at source on export of clothing items to 0.30 per cent will cost at least Tk 2,000 crore in revenue if the benefit is given for one and half years.
The revenue board had set a target to collect Tk 1,600 crore from the sector in the current fiscal year which would be lowered following the tax cut.
The revenue collection target from tax at source on export of RMG products would be lower because of reduction of tax though target of export earnings would be higher, NBR officials said.
Tax at source on export of apparel items is considered as final settlement and the sector need not to pay any other taxes, they said.