A fillip to ‘Made in Bangladesh’

The government plans to extend VAT exemption and offer tax holiday to all export-oriented goods and services in order to create new export sectors, diversify goods and explore new markets.

The move aims at making 'Made in Bangladesh' a global brand.

The proposal of the finance minister is targeted to give a major boost to the domestic manufacturing industries, including those making automobiles (three-wheelers and four-wheelers), refrigerators, freezers, and compressors.

The manufacturers of ocean-going vessels, carrying the Bangladeshi flag, will enjoy the tax holiday until 2030. They will, however, have to bring in their income to Bangladesh through the banking channel.

In Bangladesh, the prevailing tax rate for the export-oriented garment sector stands at 12 per cent for general factories and 10 per cent for green factories. The finance minister has proposed to make the same facility available for all other exporting goods and services.

Mega industries such as automobiles with investments amounting to at least Tk 100 crore would be eligible for a 20-year tax holiday. The revenue authorities proposed to extend the advance tax and the supplementary duty exemption up to June 30 of 2026 for such industries.

A 10-year tax holiday has been proposed for home, kitchen appliances, fruit processing, vegetable processing, dairy and dairy products, baby food products and agricultural equipment manufacturing industries.

The light engineering industry will also qualify for the same tax treatment.

Kitchen and home appliances makers would be granted VAT exemption for the next three years.

In order to modernise the agricultural sector, VAT exemption will continue on the production of agricultural products.

"Such tax and VAT exemptions will play an important role in compensating for the fallout of the pandemic and help grow the domestic industry," said Finance Minister AHM Mustafa Kamal in his speech.

"Also, the service export should be given due priority alongside goods export," he said, proposing to include the export of services in the definition of export in the tax statute.