The government is set to extend the VAT (value added tax) exemption facility for local manufacturers of refrigerators, air conditioners and motorcycles for two more years, officials said.
The initiative has been taken aiming to develop these sectors and increase export competitiveness of domestic industries, they added.
Presently, VAT exemption on production of air conditioners, refrigerators and motorcycles expires in June 2016, an official of the National Board of Revenue (NBR) said.
VAT on imported parts for air conditioners is likely to be imposed in the budget for the next fiscal year as domestic producers are capable of producing all kinds of parts in the country, he said.
The Bangladesh Refrigerator and Motorcycle Manufacturers Association has recently requested the finance ministry to extend the VAT exemption period until June 30, 2019.
The finance minister later asked the authorities concerned to take necessary steps in this regard.
The minister said: "We have to take initiative. There will be no importable parts in production of our refrigerators and air conditioners. Accordingly, necessary protection will be provided."
Most recently, the Bangladesh Tariff Commission (BTC) submitted recommendations and review note on the issue to the finance ministry, the commerce ministry and NBR according to the minister's directives.
The BTC has recommended extending the VAT exemption facility for domestic producers of refrigerators, air conditioners and motorcycles until June 30, 2018.
The commission has also given opinion to impose VAT on import of parts for production of air conditioners.
Besides, it has highly recommended preparing a policy on development of motorcycle industry within next one year.
"The government wants to provide necessary facility to advance the country's different domestic industries. So, VAT exemption facility for local manufacturers of refrigerators, air conditioners and motorcycles is likely to be extended for two more years," a senior official of the fiancé ministry said.
The authorities of Butterfly, Walton Hi-tech Industries Ltd, Pran Group, Jamuna Group, Khan Electronics and Myone Electronics Industries Ltd have made a large investment to manufacture refrigerators in the country.
Runner Automobiles Limited (RAL), Walton Hi-tech Industries Ltd and New Grameen Mots are producing motorcycles in the country. Of the industries, Runner Automobiles Limited (RAL) and Walton Hi-tech Industries Ltd are enjoying VAT exemption facility now.
Minister Hi-Tech Park Ltd and Walton Hi-tech Industries Ltd are producing air conditioners. They are also producing all kinds of parts of air conditioners in the country.
Refrigerator production has increased in the last couple of years as imports of compressors have been double in the country.
Over 1.5 million compressors have been imported in the fiscal year (FY) 2014-15, up by over 35 per cent than the previous FY. It was over 1.12 million and 0.9 million in the FYs 2013-14 and 2012-13 respectively.
The demands for refrigerators were over 1.9 million, 1.3 million and 1.3 million in FYs 2014-15, 2013-14 and 2012-13 respectively in the country, according to the BTC data.
About 60,000 employees are working with the industries in the country, the BTC data showed.
"We have applied to the government to extend VAT exemption facility. We think the government should extend support to the country's potential industrial sector so that new entrepreneurs are encouraged to invest in such sector," Hafizur Rahman Khan, Chairman of Runner Group, told the FE on Friday.
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