The government is going to give more importance to local industries in the budget for 2021-22 fiscal year to facilitate a smooth growth of homegrown trade and businesses.
Sources at the Finance Ministry and National Board of Revenue (NBR) said local industries will get a set of facilities in the upcoming budget to help boost domestic trade and investment.In the next budget, the government might offer VAT exemption for the ‘Made-in-Bangladesh’ goods.
Sources said VAT waiver would be extended for electronic goods, including mobile set, refrigerator, air conditioner, fridge and TV and local automobile industry in the upcoming budget.
The VAT waiver facility for the local electronics industry is likely to be extended until 2024 in the budget, which will be unveiled by the finance minister on June 3.
At the same time, the manufacturing of home appliances, including washing machine, electric sewing machine, microwave oven and blender is likely to get VAT exemption for the first time in FY 22.
In response to the long-standing demand for reducing the advance tax (AT) burden on businesses, the government may bring some changes in advance tax rates.
The government would reduce the advance tax by one per cent from the existing rates in the next budget. Besides, products like computer parts, mobile phones, cement and steel industries might be exempted from advance tax to avoid refund-related difficulties. Like AT, the government is going to ease advance income tax (AIT) pressure on imports of raw materials for the local entrepreneurs.In the next budget, there might be one per cent cut in AIT on the local ocean-going vessels. Besides, AIT will be increased on the imported luxury products.
The government is also going to reduce AIT on imports of raw materials meant for several industries such as cement and mattress.
AIT exemption facilities on 189 necessary items will remain unchanged in the next budget while there will be a hike on AIT on fragrance products to help the local perfume industry grow.
Abul Kasem Khan, Chairman of BUILD and a former President of Dhaka Chamber of Commerce and Industry (DCCI), thinks that AT and AIT are a burden for businesses and hampers their cash flow.
In the next budget for 2021-22 fiscal, tax exemptions may be offered in the light engineering industry and in skills development to reduce import dependence to bring the best of these two sectors.
Five new services in the IT sector would get tax exemption facilities in the next budget. These new services include cloud services, system integration, e-learning platform, e-book publications, mobile application development services and freelancing.
Right now, tax exemption facility has been given to 22 services in the IT sector to build a ‘digital Bangladesh’.
In the next budget, women entrepreneurs will get some new facilities including an extension of tax exemption facilities.
Sources at the Finance Ministry said the women entrepreneurs with annual turnover of Tk 7 million will get tax exemption. In the current fiscal, women entrepreneurs having Tk 5 million annual turnover are enjoying the tax exemption facilities.
Women in Ecommerce (We) Forum President Nasima Akter Nisha said that extending the tax exemption limit on the women entrepreneurs’ annual turnover will help empower the women business community.
Four agro-based sectors are likely to get tax exemption facility for 10 years to generate new investments and create jobs in rural Bangladesh.
According to the sources, entrepreneurs who will invest in the sectors from 1 July 2021 to 30 June 2030 will qualify for the tax exemption on revenue for the first ten years of their commercial production.
Agro-based entrepreneurs who are already are in the businesses will not get the facility even if they set up a new unit or merge with a new venture.