NBR rejects tax incentive plea for EPZs in less developed areas

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Doulot Akter Mala
National Board of Revenue (NBR) has rejected a proposal on offering special tax incentives for three export processing zones (EPZs) created in the less developed areas, officials said.
Customs department has turned down the proposal of Bangladesh Export Processing Zone Authority (BEPZA) to ensure a level-playing field for all exporters.
BEPZA wants to offer some special facilities for Mongla, Iswardi and Uttara EPZs considering its location in less-developed areas.
It has proposed to allow those three EPZs to sell 50 per cent of their products on payment all duties/taxes to encourage establishment of import substitute industries.
BEPZA has also sought extension of tax holiday facilities to 15 years from existing 10 years to lure investment in those EPZs.
It has also sought extension of debt service liabilities of government to 20 years for exemption and 60 years for repayment from existing 10 years and 30 years respectively.
Other proposals of the authority include 50 per cent reduction of toll of Bangabandhu Bridge for investors in those EPZs and gas connection in those three EPZs.
"Industries in the EPZ area have been enjoying bond facility to import raw materials, machinery and other building materials without payment of duty, but other industries outside EPZ are not getting the facility," said a customs official.
Only 100 per cent export oriented industries are enjoying duty waiver as they are bound to export entire products, he said.
Customs bond commissionarate has declined to accept the proposal to sale 50 per cent of the produced products locally considering
the interest of the local industries.
"Industries outside of EPZ ((excepting 100 per cent export oriented) have been importing raw materials and other machinery paying all duty taxes. So, cost of their production will be higher than that of the EPZ industries," commissioner of the commissionarate said in a letter sent to NBR recently.
Prices of EPZ products will be lower than that of the other industries, which will pose a threat to the local industries, the letter said.
"There will be an uneven competition if we allow EPZ industries to sell products locally as they are enjoying duty-free facilities," he said in the letter.
For the sake of survival of local industries and its products, the NBR has declined to accept the plea of BEPZA for offering special facilities to those EPZs, officials said.
The BEPZA has sought the facilities considering poor investment in those three EPZs, he said.
Investments in Uttara EPZ were $1.24 million, $ 0.15 million and $ 0.17 million in 2006-07, 2007-08 and 2008-09 (up to April) fiscals respectively, BEPZA statistics said.
From Uttara EPZ the country's export earnings were $ 1.31 million, $ 8.26 million and $ 5.19 million in 2006-07, 2007-08 and 2008-09 (up to April) fiscals respectively.
Investments in Iswardi EPZ were $1.43 million and $12.89 million in 2007-08 and 2008-09 (up to April) fiscals respectively. However, there was no investment in this EPZ in 2006-07.
Export earnings from Iswardi EPZ were $2.23 million, $1.21 million and $0.65 million in last three fiscals.
Investments in Mongla EPZ were $0.43 million, $2.03 million and $ 0.96 million in 2006-07, 2007-08 and 2008-09 (up to April) respectively.
From Mongla EPZ, the country earned $ 1.31 million, $8.26 million and $5.10 million in those fiscals.
There are eight EPZs under BEPZA located in Dhaka, Chittagong, Adamjee, Uttara, Mongla, Comilla, Iswardi and Karnaphuli.
Dhaka and Chittagong EPZs drew highest investment and export earning over the last three fiscals.