Tax incentives galore for investors in hi-tech parks

The government has prepared a comprehensive incentive package for attracting both local and foreign investment in hi-tech and software technology parks.
The investors in the technology parks, according to the proposed package, will be entitled to full waiver of corporate income tax for 10 years and many other tax incentives.
Income from domestic operations and exports might be fully exempted from corporate income tax for the said period, starting from the date of commencement of operations by developers, property management firms and individual investors, according to the package.
The Ministry of Information and Communication Technology (MoICT) prepared the package titled 'the preferential package for the developers, property management firms and investors in the hi-tech and software technology park'.
The incentive package has been prepared after reviewing similar types of packages in other countries and exchanging opinions with local stakeholders.
ICT secretary Sham Sundor Sikder recently sent a demi-official (DO) letter to the Ministry of Finance (MoF) secretary, urging him to take necessary steps for offering the incentives to the investors.
Officials said the MoICT urged the MoF to approve the package by issuing a statutory regulatory order (SRO) within the shortest possible time.
The tax authority will scrutinize the package and prepare a proposal suggesting amendments and revisions of the existing law to offer the incentives, they added.
The government is developing Kaliakoir Hi-tech Park and Jessore Software Technology Park for attracting the investors. It has also initiated moves to establish similar types of IT parks in five divisional cities and seven districts.
"Unless the government ensures foreign investment in those parks, the goal of economic development and employment generation would remain a far cry," the ICT secretary said in the DO letter.
The incentive package framed three sets of proposals for income tax, value added tax (VAT) and customs-related incentives.
On income tax-related proposals, the incentive package includes 12 years' corporate tax-free facility for the investors, who will invest for rural and underprivileged people.
Full waiver or withholding tax on dividend income for up to 10 years from the commencement of operations, accelerated depreciation on computers, machines and software for three years, tax exemption on interest income of foreign and domestic institutional lenders, royalties, technical fees, facilities for other repatriation, and income tax exemption for expatriates for up to three years etc are included in the incentive package.
The investors are likely to enjoy 10 years full tax exemption from payment of VAT, payable on raw materials, pre-fabricated construction materials, plant, equipment, spare parts, bills or fee of design and construction companies.
Except petroleum products, investors might get tax benefit on purchase of goods from domestic tariff area, VAT exemption for 10 years on electricity usage and waiver of VAT on services provided by the developers and foreign multinational companies to the units located in the IT parks.
On customs-related incentives, the package incorporates duty-free import of software and hardware for operational use up to a maximum of US$ 1.25 million per unit, import of equipments on loan or lease basis without any customs duty, duty-free facility for import of two vehicles, up to 3,000 cc for operational use of the firm, investing $10 million or have more than 1,000 employees.
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