Bangladesh's jute goods makers get a shot in the arm
DHAKA (The Daily Star/ANN) - Tax benefits to continue for them till fiscal 2023.
Jute goods makers have got a shot in the arm from the National Board of Revenue, which has extended reduced tax benefit to them until fiscal 2022-23.
At present, jute goods manufacturers pay 10 percent tax on their export income instead of 35 percent. But that privilege was due to expire in June next year.
Now, the revenue authority has extended the benefit not only by three years but has also expanded it to those who do not export.
In other words, jute goods makers would now pay 10 percent tax on their income.
“This will be beneficial for the sector to withstand the current difficulties relating to exports,” said Shahidul Karim, secretary general of the Bangladesh Jute Spinners Association (BJSA), which represents more than 60 percent export earners in the sector.
Backed by the availability of raw jute for domestic cultivation, the industry depends largely on exports as the domestic market for jute goods such as sacks and bags is not big enough.
In recent years, export of jute and jute goods has been oscillating thanks to the crisis in the Middle East and the anti-dumping duty slapped by India in January 2017.
In fiscal 2018-19, jute and jute goods exports dropped 20 percent. In the first quarter of the fiscal year, it edged up 2 percent, according to data from the Export Promotion Bureau (EPB).
Taxmen said the reduced tax benefit has been provided so that the sector recovers from its present situation.
“Historically, jute is an important and privileged sector in our country. It has been enjoying reduced tax benefits for the last several years and we have extended the tenure,” said Ikhtiar Uddin Mohammad Mamun, the NBR’s first secretary of tax policy.
Jute goods is one of the half a dozen of industrial sectors that enjoy reduced tax rate, much below the normal corporate tax rate for companies. Garment, the main export earner, and textile are the other two.
Besides, tax break is available for the power sector and factories to be established in economic zones, hi-tech parks and export processing zones.
Taxmen said jute goods exporters are also likely to see a cut in tax at source on export proceeds from shipment of jute goods.
Until last fiscal year, jute goods exporters had to pay 0.60 percent tax at source on their export receipts.
The rate of source tax on export earnings rose to 1.0 percent from this fiscal year.
The withholding tax on export proceeds from jute goods is likely to be reduced to 0.25 percent for the current fiscal year.