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Bangladesh businesses protest against export tax hike

Publication Date : 12-06-2012


Business leaders of Bangladesh yesterday urged the government to review its plan to increase tax at source on exports, saying the move will badly impact their business.

Finance Minister A. M. A. Muhith in his budget speech proposed raising tax at source on exports of all kinds of products to 1.2 per cent from the current 0.60 per cent.

“It is a 100 per cent rise compared to the existing rate, which is unrealistic for the export-oriented industries,” said Rafez Alam Chowdhury, president of Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association.

He said the apparel exporters are facing a setback due to the economic crisis in the US and European Union.

“Such a move will have a negative impact on exports. We hope the government will reconsider the plan,” said Chowdhury at a press conference in Dhaka.

The association, however, hailed the government for withdrawing value added tax on rented building, and customs duty on import of capital machineries and equipment for setting up effluent treatment plants at export-oriented factories.

The association said the sector will be able to earn $3.5 billion by exporting backward linkage products this fiscal year, whereas the target was at more than $4 billion, according to a statement.

Shippers Ccouncil

Shippers' Council of Bangladesh (SCB) also termed the government's proposal of raising tax at source on exports as "irrational".

The export sector has been facing tough competition due to the global economic meltdown, said Nasiruddin Ahmed Chowdhury, chairman of the SCB.

“If a 1.20 per cent tax is imposed on exports, the sector would severely be affected,” said Chowdhury in a statement.

He demanded withdrawal of the tax entirely. But Chowdhury hailed the government's plan to slash tax by 5 per cent on merchant banks.

It would be a positive step if the tax exemption limit for profits from stockmarket is increased to 20,000 taka (US$244) from the proposed 5,000 taka ($61), he added.

He hailed the government's plan to increase allocation for the railway, shipping, education and vocational education sectors. But in the proposed budget, no steps were taken for the jute exporters in the private sector, he added.

Chowdhury said jute exporters are playing an important role in earning foreign currency, so they must be allowed to take fresh loans from banks.

Insurance Association

Bangladesh Insurance Association urged the government to withdraw the proposal of imposing 10 per cent tax on the incomes of life insurance policyholders.

It said the move will discourage small savers and hurt the life insurance business.

The new tax will discourage people, especially those in the rural and semi-urban areas, to buy life insurance policies, the association said in a statement.

The government should review the decision considering the poor coverage of life insurance in the country, it said.

The association also urged the government to reduce corporate taxes for the insurance sector.


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