Govt proposes doubling source tax on exports

Illustration: TBS

Finance Minister AHM Mustafa Kamal proposed to increase the source tax on export earnings to 1% from 0.5% in the national budget for the FY23  at Jatiya Sangsad on Thursday.

The move comes as export growth is projected to slow in the months ahead amid a gloomy global financial outlook.

" I propose to raise the rate of source tax on export proceeds to 1% from that of 0.5%," the finance minister said on his budget speech.

" Deduction at source is regarded as the cornerstone of income tax collection.  The same is true for our country too. Therefore, rationalizing the rate of source tax carries immense importance in formulating revenue policy," he added.

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.

Finance Minister AHM Mustafa Kamal has placed the Tk6,78,064 crore national budget for FY23 at Jatiya Sangsad according to the top priority of safeguarding marginal people from inflation fuelled by the Russia-Ukraine conflict.

This is the fourth budget of the third consecutive term of the government led by Prime Minister Sheikh Hasina and also the overall 51st budget of the country.

The proposed budget is Tk74,383 crore higher than the original budget size for the FY2021-22 fiscal year, which was Tk6,03,681 crore.