The tax authority in Bangladesh has withdrawn the special tax rate for apparel exporters in a bid to prevent transfer of profit from other businesses to export-oriented industries. From 2005 to June 30, 2014, taxmen calculated tax at an estimated 10 per cent at the time of annual tax assessment. But the National Board of Revenue (NBR) did not extend the facility in the Budget for fiscal year 2014-15 following allegations of shifting profits from other businesses to export-oriented industries. The tenure for the special tax rate for readymade garment and knitwear exporters expired on June 30, 2014.

Under the previous rules, there was scope to show higher income from apparel export, by shifting from other businesses, in the tax file. Taxmen smelt that a large volume of undisclosed money was whitened by taking advantage of the provision. From the current financial year, taxmen would not allow the special tax rates to the readymade garment sector and knitwear exporters for their export earnings. In April 2014 the NBR had cut the rate of tax at source for apparel exporters to 0.30 per cent from 0.80 per cent that would continue until June 30, 2015. Exporters say investment in the apparel sector would be discouraged by the provisions.