Bangladesh’s National Board of Revenue (NBR) announced last week that it would reduce the tax at source on all readymade garments (RMG) from 0.8% to 0.3%, according to the Dhaka Tribune.
The lower tax rate will apply through June 2015 and export-oriented RMG products, particularly knitwear and woven garments, terry towel and garment accessories will be taxed 0.3% on export proceeds compared to the previous 0.8%.
According to officials, the government made the decision to cut the tax rate as an incentive for RMG exporters whose business suffered during the political unrest that led up to the January 5 polls.
Bangladesh’s readymade garment exports totaled $18.05 billion from July to March 2013-14, up 15 percent from $15.67 billion over the same period in 2012-13.
Officials said the cut could cause revenue loss of Tk 2,000 crore ($257.8 million) for the national exchequer.