Bundle of tax-benefits for local industries proposed

Six more ICT sectors including freelancing to enjoy tax holiday facility

FE REPORT | Friday, 4 June 2021

The Finance Minister AHM Mustafa Kamal, on Thursday, proposed a bunch of tax-benefits for the local industries by reducing tax on import of raw materials and offering tax holiday facility for more than a decade.
A number of sectors including mega industries such as automobile (three-wheeler and four-wheeler), home appliances, light engineering, cement, rod, processors of agricultural products such as fruit, milk, vegetables, children's food, oceangoing ship, IT hardware, new hospitals, small and medium enterprise (SME) owned by women entrepreneurs would enjoy tax benefit in the fiscal year (FY) 2021-22, according to Finance Bill-2021.
A special tax exemption for 20 years has been offered under 'Made in Bangladesh' title for automobile manufacturers who would invest above Tk 1.0 billion in the country.
Local home appliance manufacturers will also enjoy 10 years tax holiday facility under the tax incentives for 'Made in Bangladesh', according to the proposed budget.
The home appliances include washing machine, blender, microwave woven, electric sewing machine, induction cooker, kitchen hood and kitchen knives.
Agricultural product processors will also enjoy 10 years of tax waiver in the upcoming FY, according to the finance bill.
Entrepreneurs in the light engineering sector will also enjoy the tax holiday for 10 years for spare parts, not full machinery, used only in industries.
For encouraging digital transformation, the finance minister has also included six more ICT sectors under tax holiday facility along with 22 sectors.
The sectors include: cloud service, system integration, e-learning platform, e-book publication, mobile application development service and IT freelancing.
In a bid to reduce import dependency, the finance minister has offered 10 years tax holiday for manufacturers of motherboard, casing, UPS, speaker, sound system, power supply, USB cable, CCTV and pen drive.
10 years tax holiday has also been proposed for the new hospital investors outside Dhaka, Chittagong, Gazipur, and Narayanganj.
However, the general hospitals must have at least 250 beds, and specialized hospitals minimum 200 beds.
Companies providing education or training for national skill development and employment generation will also enjoy tax holiday for a decade.
The areas of training and education include diploma and vocational education in agriculture, fisheries, science and IT, automobile, aircraft preservation, food, footwear, glass, mining, mechanical, ship building, leather, refrigeration, ceramics, mechanist, garments design, pattern making, pharmacy, nursing, integrated medical, radiology and imaging, ultrasound, dental, animal health and production service, clothing and garment finishing, poultry farming.
For women entrepreneurs, the budget has proposed tax-exemption up to Tk 7.0 million on their annual turnover.
The rate of depreciation for general building for businesses has been proposed to cut by 5.0 percentage points while for factory building 10 percentage points.
For ensuring the availability of micro-finance, the government has offered tax exemption for the registered companies under Microcredit Regulatory Authority on their income from microcredit.
The tax authorities may allow financial transactions through mobile financial services (MFS) above Tk 50,000 along with bank transfers. It may also make salary payment of above Tk 15,000, any amount of house rent through banking channel or MFS.
Tax at source will be 50 per cent higher if contractors do not receive their bills through the banking channel or MFS.

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