BGMEA expresses concern over source tax hike on export

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has expressed concern over finance minister's proposal to increase the source tax on export earnings to 1% from 0.5% in the national budget for the FY23.

In its reaction on the proposed budget, the apex trade body of Bangladesh's garment manufacturers noted that the source tax hike will make the situation difficult for the industry in the current global context.

"We hope the honourable prime minister and the finance minister will consider keeping the source tax in the garment industry at 0.5%. The industry will get relief in the current crisis if a 0.5% source tax on exports remains effective for the next five years," the BGMEA said in a statement issued on Thursday.

It said that if the industry survives, revenue will come and new employments will be created. 

Mentioning that garment export revenue was $31.45 billion in last fiscal year, the BGMEA said it expect the revenue will be $41 billion this year. 

The government imposed the source tax on exports for the first time in 2005. Initially, the rate was 0.25%. Later, it was raised at different times and was set at 1% in fiscal 2014-15.

More than 80% of Bangladesh's export income comes from the readymade garment sector alone. Accordingly, entrepreneurs in this sector become the most vocal against attempts to hike the source tax on exports.

For the last two years, the government has been levying 0.5% source tax on export earnings considering the pandemic situation.