Local software companies hoped the increased value added tax (VAT) on imported software would protect local promising industry.
Finance Minister AMA Muhith proposed 5% VAT on imported software, raising from 2%.
Bangladesh Association of Software and Information Services (BASIS) already announced a $1bn earning target from software export by 2018.
In the July-April period of the fiscal year 2014-15, Bangladesh earned $109.10m from export of computer services.
They said local software entrepreneurs have high potentials to achieve the target as 70,000 professionals, mostly graduates of information technology, are involved with the industry.
As per BASIS data, there are over 800 registered software companies in the country, along with a few hundred unregistered small and home-based software and IT ventures doing business in both local and international markets.
BASIS secretary general Uttam Kumar Paul said the newly proposed 5% Vat will discourage the software importers as local industry is making software at more affordable prices than the imported ones.
“Many countries like India have introduced certification system to import foreign software, which is a positive step to protect local entrepreneurs,” he said.
According to Bangladesh Bank statistics, in last three fiscal years the software import has increased rapidly.
In the fiscal year 2011-12, Bangladesh imported $4.57m worth of computer data processing and hosting services.
“Just after two years, we have imported same software at $11.17m with $6.6m up.”
In the FY2014-15, different companies imported installation, maintenance and repair of computers and peripheral equipment services worth $2.55m.
The figure increased from $479,022 in FY2011-12.
Jahidul Hasan, managing director of local company Business Automation, told Dhaka Tribune that in last couple of years there was a rapid rise in software import.
He hoped the proposed 5% Vat would benefit local software manufacturers whereas it would also bring a discipline in the country’s software industry.
“We are happy for increasing Vat on imported software, but the government will have to stop illegal import of software, which is a major threat for local industry,” said Fahim Mashroor, former president of BASIS.
He alleged that many companies including financial institutions imported software resorting to illegal ways.
“To stop such trend, a strong supervision is needed under the government monitoring system,” Fahim Mashroor suggested.
