Tax holiday facility can be extended to all industries, except those are environmentally-hazardous, experts said at a pre-budget discussion on Sundayday.
Non-traditional export sector along with large scale foreign direct investment also should be considered for the facility, they added.
Business Initiative Leading Development (BUILD) and Bangladesh Investment Development Authority (Bida) jointly organized a pre-budget dialogue on “Revisiting Tax Holiday Policy of Bangladesh for Supporting New Export Sectors” in the capital.
Bida Executive Chairman Kazi M. Aminul Islam was the chief guest, while former Dhaka Chamber of Commerce and Industry (DCCI) president Abul Kasem Khan chaired the session.
Kazi M Aminul Islam said, "Tax holiday (TH) is an important incentive for the development of industry and trade. The government is giving tax holiday facility in different sectors.”
There is no alternative to tax holiday to diversify industry and export , said DCCI president Abul Kasem Khan.
BUILD CEO Ferdaus Ara Begum presented the paper on “Revisiting Tax Holiday Policy of Bangladesh for Supporting New Export Sectors.”
She said tax holiday facility might be provided for all industries except hazardous industries. Leather and leather goods, plastic and RMG sector could also get tax holiday benefits, she added.
Member of the National Board of Revenue (NBR) Kanan Kumar Roy said tax holiday was an important incentive for the development of industry but revenue collection was also important for the state's administrative and development expenditure.
"In order to provide tax incentive, the government has to make decisions by coordinating various economic issues," she remarked.
The BUILD CEO also has said tax holiday facilities for newly established industries were introduced through Finance Act 1974 (Section; 14A, Income tax Act 1922). Presently 5, 7 and 10 years TH facilities are enjoyed by the industries set up in the developed, less developed and least developed areas of the country.
In Bangladesh, 22 industrial and 13 types of infrastructural enterprises currently enjoy tax holiday facility. Industries set up in Dhaka & Chittagong (except Hill Tracts) are eligible for 5 years of TH (100% for first two year, 50% for next two year and 25% for 5th year). For others, 7 year TH (100% for first 3 year, 50% for next 3 year and 25% in 7th year), the paper said.
Her paper also mentioned there was an eligibility list of industries for tax holidays, as physical infrastructural facilities also enjoy TH benefits. The government, from time to time changes the schedule of preferences based on priority. TH is meant for new industries established in the remote areas of the country.
A number of countries are using TH as one of their policies to attract investment in the comparatively less developed areas, speakers added.
In Indonesia for example, the industrial undertaking must be located in the remote areas.
In Vietnam, TH period starts immediately after an enterprise starts making profits, while SMEs get priority.
In India, export sectors are prioritized in TH policy, while Sri Lanka gave thrust on import-substitute industries.
Thailand provides importance in new and innovative, high tech and technology oriented industries.
IT-enabled services are getting priority in Pakistan, while business enterprises of metropolitan areas should not get TH, as enforced in the Philippines.
