Govt offers tax benefit to world-class hotel investors

The government has offered tax benefit to lure investment in world-class hotels by allowing the investors to import capital machinery at a reduced rate of Customs Duty (CD).
The National Board of Revenue (NBR) has set 5.0 per cent CD, exempting all other taxes, on import of machinery by the hotel owners which was up by 25 per cent.
All types of Regulatory Duty (RD), Supplementary Duty (SD), Value Added Tax (VAT) on import of machinery have been waived for investors of new hotels.  The NBR issued a Statutory Regulatory Order (SRO) Sunday by making the reduced tax effective.
The SRO, signed by NBR chairman Ghulam Hussain, has stipulated five-point condition on availing the facilities by hoteliers.
Internationally recognised chain hotels or civil aviation and tourism ministry accredited standard residential hotels will be able to enjoy the tax benefit before launching their commercial activity.
The hotel owners, however, will be entitled to enjoy the tax benefit ones. Each of the applications on availing the reduced tax rate will have to be approved by the NBR.
The businesses must be registered with the Value Added tax (VAT) wing. Hotel investors will have to furnish documents including VAT registration certificate and copy of registration of the Board of Investment (BoI).
The NBR will need an acknowledgement letter of Civil Aviation and Tourism Ministry to allow the hotel investors availing the tax facility. The letter will contain BoI registration number, Business Identification Number (BIN) and Taxpayers' Identification Number (TIN) of the investor. The letter must contain certification of a high-powered committee, comprising stakeholders and experts. The committee will give the certification after verifying and scrutinising standard of the proposed hotel after inspection.  
However, the internationally recognised chain hotels will not be required to submit the acknowledgment letter.
The international franchise will have to furnish a copy of agreement that the investor signed with the chain hotels.
The investors will have to submit a copy of lay-out plan of the proposed hotels. They will also submit a detailed list of machinery, for which the investors are seeking the tax benefit.  
A senior customs official said the NBR has defined the necessary capital machinery for the benefit in the SRO following request of the civil aviation and tourism ministry and BoI.
"The government offered the facility to accelerate growth of country's tourism sector by attracting investment in standard hotels. Specially, world class standard hotel needs the machinery and equipments, listed for tax benefit," he added.
A total of ten luxury hotels including Mariot, Hilton, Sea Pearl are in pipeline and waiting for the government's incentive to invest here, he added.
Usually, the import duty on those capital machinery varies from 5.0 per cent to 25 per cent, which the customs wing kept to 5.0 per cent, he said.
H.M. Hakim Ali, Founder President, Bangladesh International Hotel Association ( BIHA), welcomed the decision expressing his hope over flourishing the tourism sector with the facility.
"We have long been requesting the government for the incentives for investment which exists in other countries," he added.
Currently, around 50 per cent of investment cost of luxury hotels is required for purchase or import of capital machinery, he added.
"We also sought the government's land on lease to set up hotels," he added.
There are 25 three star and 15 five star hotels in Bangladesh, according to the BIHA president.
According to the SRO, interior decoration materials, wooden doors, windows and frames, floor panels, carpets, curtains, marble, granite, unglazed and glazed tiles, sanitary wares, kitchen and cooking equipment including ceramic kitchenwares, float glass reflecting/non-reflecting, coloured float glass, glasswares and cooking appliances, building security equipments including locks, base stations, webcam and DVR, fire fighting and protection equipments including hose pipe, fire extinguishers and spray guns, electric substation, transformer: capacity more than 3000 kva, automatic circuit breakers, switchgear, busbar, sofa, metal and wooden furniture for office, wooden furniture for kitchen and bedroom, mattresses, lighting equipments including light with fittings, bedside or floor standing lamp, energy saving lamps with fittings, LED tubes or bulbs with fittings, pre fabricated building, equipments for health club including water purifying system for swimming pools, table tennis equipment and equipments for gymnastics are entitled to tax benefits.