Bangladesh Bank has reduced the local value-added rate of government subsidy on exported products from the previous limit of 30%. From now on, garments exporters will get cash incentives and subsidies from the government only if they add 20% value.
The central bank issued a notification in this regard earlier this week.
Net FOB (Free on Board) local value-added is calculated by deducting the cost of import of raw materials used in production from the export price. Exporters in the export-oriented garments sector now receive 4% alternative cash assistance instead of customs bonds and duty drawbacks.
A senior official of Bangladesh Bank said that the local value-added rate has come down in recent times due to an increase in import costs. That is why the central bank decided to reduce the value-added limit.
According to the notification of Bangladesh Bank, the new rate has been fixed as per the decision of the government. Applications for incentives made after export shipment shipping, especially those that have not been resolved in the current fiscal year, will also fall under the new guidelines.
