The scope of tax holiday is being widened from the next fiscal year in a bid to encourage private investment in physical infrastructure and industries.
In the budget of FY’20, the finance minister has proposed a lower rate of tax for 10 years for those who will invest in 19 infrastructure projects.Besides, this facility for investment in 26 region-based industries has been extended up to June 2024 what was supposed to end this June.
Eight new industrial sectors have also been proposed to be newly brought under the tax holiday facility.
In his budget speech placed in the parliament on June 13, Finance Minister AHM Mustafa Kamal said with tax holiday extension proposal, he sought to increase investment, businesses and exports, and create more jobs. The newly included industries under the facility include agro machinery, leather, leather goods, household items, LED television, toy making, mobile phone and plastic recycling industry.
Industries already enjoying the facility are pharmaceuticals, auto brick manufacturing, automobile, primary electronic parts, bicycle, bio-fertilizer, biotechnology-based agro products, boiler and its spares, compressor, computer hardware, furniture, home appliance, pesticides, fruit and vegetable processing, petro chemical, textile machinery and tyre production.
All these industries will get tax holiday till 2024 irrespective of their location in the country.
On the other hand, investors will get 5 to 10 years of tax holiday depending on their investment in different regions.Investing in districts other than Dhaka, Narayanganj, Gazipur, Mymensingh, Chattagram, Rangamati, Bandarban and Khagrachhari districts will get a five-year tax holiday.
In this case, investors will get 90 percent tax holiday in the first year, 80 percent in the second year, 60 percent in third year, 40 percent in fourth year and 20 percent in fifth year.
Moreover, the industries outside Khulna, Rajshahi, Rangpur and Barishal city corporations and in Rangamati, Bandarban and Khagrachhari districts will get 10 years tax holiday with 90 percent tax exemption in first two years which will gradually decline to 10 percent in the 10th year.
Infrastructures getting the tax holiday are deep seaport, elevated expressway, EPZ, flyover, gas pipeline, hi-tech park, ICT village and software technology zone, ICT park, water treatment plant and water supply pipe line, LNG terminal and transmission line, mobile phone tower or tower sharing infrastructure, monorail, rapid transit, renewable energy, sea and river port, roads and bridges, underground rail and water treatment plant.
Investors of these projects will get a lowered rate of tax holiday starting from 90 percent tax exemption in first and second year which will eventually come down to 10 percent in 10th year.