Bangladesh’s garment makers want source tax on export receipts to be waived for three years. As of now, there is a 0.70 per cent tax on total export proceeds from major export items, including garments. Exporters suggest a tax of 0.50 per cent only on cutting and making instead of a source tax on export proceeds.

The plea from garment exporters come at a time when apparel shipments are on the rise. Garment shipments rose nine per cent year-on-year in the first nine months of the fiscal year. Source tax collected from export proceeds of garments is roughly the revenue collected as income tax from the apparel sector. Apparel makers enjoy a reduced corporate tax rate of 12 per cent.

Some garment exporters are said to import fabrics duty-free and sell them in the domestic market. Producers who make cloth for the domestic market say this hurts them. Leather goods and footwear manufacturers and exporters have called for a reduction of tax on technical assistance and royalty fees and duty-free benefits for importing equipment to ensure fire safety at factories. The garment industry is the country's main export earner. It is looking to hit 50 billion dollars in shipments by 2021.