The government has slashed by 0.5 percent tax at source for readymade garment (RMG) export to make up for loss incurred during last year’s political turmoil.
Tax on other exports has been reduced by 0.2 percent.
The National Board of Revenue (NBR) announced the cuts on Wednesday, a day before the first anniversary of Bangladesh’s worst industrial disaster that killed over 1,130 people, mostly RMG workers.
Bangladesh is the world’s second largest RMG manufacturer after China. The sector contributes up to 80 percent to the country’s export earnings.
However, the sector took a hit after the Apr 24, 2013 Rana Plaza collapse, coming close on the heels of the 2012 Tazreen Fashions Limited factory fire that killed over 110 workers.
Foreign buyers have been mounting pressure on the RMG factory owners to improve working condition at the factories and hike workers’ wages.
Last year’s political violence came as a huge blow to the export-oriented sector. Earlier this month, the World Bank said poll-related violence had cost Bangladesh’s economy a total value added loss of $1.4 billion in the 2013-14 fiscal.
RMG factory owners have been demanding a tax waiver at the source to compensate for the losses.
They have lobbied with Finance Minister AMA Muhith and top government officials for this cut.
Last month, Muhith had assured exporters of considering their demand.
From now on, a 0.6 percent tax will be imposed on other export items. The rate was fixed at 0.8 percent in the budget.
The NBR said Wednesday’s circular would remain in force until the 2014-15 budget is passed in July.
Source: Bd news24