Bangladesh is likely to reduce the tax at source on export from the proposed 1.50 per cent for the next fiscal year 2016-17 in the wake of hectic lobbying from different stakeholders.

The proposed tax rate may come down due to huge resistance by different quarters but the rate will not be set below one per cent considering the revenue prospects.

Earlier, in FY’16, there was a proposal to increase the tax at source on export proceeds to one per cent, but later it was reduced to 0.60 per cent, following protests, mainly from clothing exporters.

The industry feels if the proposed tax at source is implemented, it will increase production cost and reduce competitiveness in the global market. The proposed hike on tax at source, it’s felt, will not only cast a shadow on new investments but also lead the sector to face tough competition as the prices of products would go up further.

Local producers feel they will lose their competitive edge while competitors will become stronger.

Leading business chambers and trade bodies have been pressing for a reduction in the tax rate or keeping it unchanged at 0.60 per cent for the next fiscal year considering the interest of exporters.