RMG export: 1pc additional income incentive to continue, source tax hiked to 0.5pc
Financing Minister AHM Mustafa Kamal today proposed continuation of just one 1 percent additional income incentive for the country's garment export in 2020-21 fiscal time too, considering the monetary fallout from Covid-19 pandemic.
The federal government introduced 1 percent additional cash subsidy on garment export in the very beginning of the 2019-20 fiscal year.
The incentive means the garment exporters have been enjoying 5 percent cash incentive for all non-traditional export markets. Bangladesh considers all of the markets as non-traditional market segments except the EU, the united states and Canada.
Overall, for all marketplaces, the garment exporters have been enjoying 1 percent cash incentive on their export receipts in a time. Minister Kamal proposed to continue this subsidy as well in the fiscal 2020-21.
The finance minister also proposed source tax for exporters at 0.50 percent, up from the existing 0.25 percent source tax rate. Although he at first proposed the foundation tax at 1 percent in the outgoing fiscal, it had been reduced to the present level through a Statutory Regulatory Buy (SRO).
Kamal also proposed continuation of reduced corporate tax for non-green garment factories in 12 percent and for green factories at ten percent for next two years.
The minister reduced the value added tax (VAT) on sales of synthetic yarn and polyester yarn at Tk 6 per kilogramme which was previously 5 percent of value. The VAT on revenue of yarn designed for domestic markets in addition has been lowered by Tk 1 per kilogramme. Presently, the yarn manufacturers need to pay Tk 4 per kg as vat. However the minister proposed Tk 3 per kg in the approaching fiscal year.
Kamal also proposed to waive Vat on creation of Personal Protective Apparatus (PPEs) and masks. The PPEs and masks have become major export things from Bangladesh lately amid coronavirus pandemic.
Cotton imports will continue to enjoy zero duty as that is a vital raw material for the textile and garment sector.
The minister additional proposed for tax rebate on import of RFID tag used in the garment factories, industrial rake and cutting tables.
The federal government has given Tk 6,825 crore as export incentives to 37 diverse sectors in the outgoing fiscal year. The amount was Tk 4,000 crore in the fiscal 2018-19.
