Tax holidays for new sectors soon

The government is considering giving a ten years tax break in the upcoming national budget to some new sectors, which include agriculture, food, and home appliance products, to attract investments from entrepreneurs.

Institutions that will invest in these sectors will get tax holiday benefits for the next ten years.

Entrepreneurs will get a 10-90% tax exemption from the first year to the tenth year.

According to the National Board of Revenue (NBR) sources, the tax holiday facility will run from July 1, 2021, until June 2030.

The NBR hopes this would create jobs by bringing in investment from entrepreneurs amid the ongoing Covid-19 pandemic that caused disruptions such as unemployment and declining consumption trends among consumers.

It is noteworthy that tax holiday benefits have helped develop specific local sectors such as poultry and fisheries.

Rizwan Rahman, president of Dhaka Chamber of Commerce and Industries (DCCI), said: “Such benefits would help Bangladesh in product diversification as well as export basket diversification, reducing our dependence on just one specific sector. But sectors that currently have lower levels of contribution to the GDP need to be focused on.”

“In regards to the agriculture sector and the integration of technology in it, we have a long way to go. With the scope of tax holidays increasing in both the agriculture and technology sector, this would provide the perfect opportunity,” he added.

Five new sub-sectors of the agriculture industry, namely agro-processing, fruit processing, dairy production, dairy products, and farm machinery, as well as some IT services might also get tax-holiday benefits.

Sources say that five new services in the IT sector entailing cloud services, system integration, e-learning platforms, e-book publications, mobile application development services, and freelance might also get tax exemption facilities.

Prof Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), said: “Tax holiday benefits on the proposed sectors will help us to attract FDIs in the special economic zones (SEZ); identified by the government.”

“Our agriculture sector holds immense potential both in the local and global market, but the existing levels of forward-backward linkage in the sector is still weak.

With the pandemic shifting our dependency on digitization, it is the perfect opportunity to bring the informal sector under digitization and enhance our capacities. Furthermore, the electronic industry holds good potential both in the global and local markets. This might be an opportunity for us to start producing quality electronic products locally and consume those in contrast to importing,” he added.

Currently, various services in the IT sector are getting tax exemption.

These include software development, software application customization, digital content development and management, digital animation development, website development, website service, overseas medical transmission service, call center service, etc.

The government might also bring electronic products useful for households- AC, fridge, TV, washing machine, electric sewing machine, and others - under the tax holiday benefits, subject to special conditions to be proposed by the NBR.