Tax at source for the country’s apparel sector, the $34 billion industry, increased to 0.5% from 0.25% for the fiscal year 2020-21.
Currently, the sector enjoys a 0.25% source tax for the outgoing fiscal year.

“Exports of goods and services, including that of RMG, have faced a downturn due to the outbreak of the COVID-19 pandemic. I, therefore, propose to reduce the rate of withholding tax on export proceeds as a part of extending overall support to our export sector,” said Finance Minister AHM Mustafa Kamal on Thursday while he was announcing the national budget for the fiscal year 2020-21 in the parliament.
The existing rate of collecting withholding tax on all sorts of export proceeds including that of RMG as stipulated in the Income Tax Ordinance is 1 percent that has further been reduced through an SRO, which continues to be in force till 30th June 2020, said Kamal.
I propose to amend the Ordinance to fix the rate of withholding tax on all sorts of export proceeds including that of RMG at 0.5 percent instead of the existing rate of 1 percent, he added.
Though, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) demanded to keep the rate unchanged.
However, the corporate tax remains the same at 12% for the sector, which is 10% for certified the green factory manufacturers, for the next two fiscal years.