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Recast tax provisions to woo investors, suggests BIDA

Depreciation, amortisation facility

Doulot Akter Mala | February 06, 2019 00:00:00

The Bangladesh Investment Development Authority (BIDA) opined that the existing tax provisions on depreciation of intangible assets are not investor-friendly in line with the economic advancement, officials said.

It also sought rationalisation of the tax provisions on amortisation to attract more investors.

Focusing on the issues, the authority has proposed the National Board of Revenue (NBR) to update the third schedule of the Income Tax Ordinance (ITO) 1984.

The third schedule contains the provisions relating to computation of depreciation allowance and amortisation facility.

Depreciation and amortisation is a form of tax incentive, provided to the investors to reduce tax liability on their profit gain.

A discussion on necessity of amending the third schedule will be held at BIDA office in the capital today (Wednesday). Representatives of NBR, among others, will attend the meeting.

Besides, experts from the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the Institute of Chartered Accountants of Bangladesh (ICAB) and other professional bodies will give their opinions in the meeting.

Officials said BIDA will prepare its recommendations on the basis of opinions of the stakeholders.

BIDA has some case studies, where investors sought rationalisation of provisions under the third schedule. Some provisions in the tax law are discouraging investors, they added.

NBR officials said a committee, comprising NBR and BIDA officials, prepared a concept paper, following BIDA's proposal to update the third schedule.

According to the committee report, the tax authority, however, found that the third schedule is adequately updated in line with the modern practices.

Officials said NBR updates the income tax provisions through Finance Act every year to align those with the international best practices.

According to NBR's review, agriculture sector enjoys the highest 33.3 per cent deprecation facility on its machinery. Some other industrial sectors also enjoy depreciation facility on their equipments for payment of tax at reduced rates.

NBR also offers accelerated depreciation facility to the industry. On accelerated depreciation, the industry enjoys 100 per cent tax depreciation on its equipment in the first two years of commencing production (80 per cent in the first year and 20 per cent in the second year).

NBR offered 30 per cent depreciation facility on computer and computer parts through Finance Act 2008.

Since fiscal year 2013-2014, NBR has been allowing amortisation on fees like licences fees and spectrum assignment fees, paid by various companies.

NBR is also giving amortisation benefit to mobile operators on their spectrum assignment fees, licence fees and other fees, paid to the Bangladesh Telecommunication Regulatory Commission (BTRC).

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