Bangladesh: Government lowers Corporate Tax for RMG sector to 12%; retains Tax at Source 1%
In what may be termed as some reprieve to the readymade garment manufacturers of Bangladesh, the Government has lowered the Corporate Tax to 12 per cent from 15 per cent, as was proposed in the Budget placed before the Parliament on June 1. However, Tax at Source of 1 per cent on export earnings from readymade garment industry has been retained.
Finance Minister Abul Maal Abdul Muhith in his final Budget speech said that the garment exporters would have to pay 1 per cent Tax at Source in the new fiscal year. The rate is supposed to be 1 per cent in FY 2017-18 after exporters paid the tax at the rate of 0.7 per cent in FY’17 as the National Board of Revenue reduced the rate for the year through a special statutory regulatory order.
The rate of Corporate Tax for Green factories has also been reduced to 10 per cent from the proposed 14 per cent. The Parliament of Bangladesh had passed the Finance Bill-2017 recently, incorporating some changes, including those related to Value-Added Tax, Income Tax and Customs Duty.
It may be mentioned here that in FY 2016-17, the rate of Corporate Tax for the garment sector was 20 per cent, which the Finance Minister in the proposed Budget reduced to 15 per cent before cutting further to settle at 12 per cent.
The corporate tax for RMG sector in Bangladesh which was earlier rated at 20 per cent, has now reduced to 12 per cent.