ICT entrepreneurs demand extension of tax exemptions

With tax exemptions for the information technology (IT) and IT-enabled services sector ending after this fiscal year, ICT entrepreneurs are demanding the continuation of such incentives for seven more years to help build a 'Smart Bangladesh'.

Entrepreneurs fear that suspension of the privilege would be a crushing blow to the industry, which has experienced some headwinds in recent months due to a slump in global demand.

The global economic slowdown has resulted in a 4.4 percent drop in Bangladesh's IT exports, which reached $221.5 million in the first five months of the current fiscal year.

"The tax exemptions are crucial for local IT entrepreneurs as the sector has all the potential for export diversification," said Russell T Ahmed, president of the Bangladesh Association of Software and Information Services (BASIS).

"Most importantly, the tax exemption has played a role in building a digital Bangladesh and the local IT industry was the architect of that."

As the core vision of the government is to transform the country into a Smart Bangladesh, the continuation of the IT exemption is more important than ever before, he added.

He said BASIS had conveyed this message to senior government officials and hoped it would be considered.

To transform into a Smart Bangladesh, all sectors will be required to strategically embrace ICT. Its implementation is pivotal and the transformative potential of technology is undeniable, Ahmed added.

BASIS and other ICT trade bodies have already sent proposals to Finance Minister Abul Hassan Mahmood Ali, urging the government to extend tax exemptions till June 2031.

The government has set an aim to achieve its vision for a Smart Bangladesh by 2041. But if the tax exemption is not extended, it will seriously impact the overall goal since ICT will be the backbone of Smart Bangladesh, said Rashad Kabir, director of BASIS.

"It will ultimately increase the cost of ICT-related products and people will be reluctant to buy digital products eventually," he said.

"Over the last couple of years, we have heard a number of commitments regarding the extension of tax exemptions from a number of ministers of the present government," Kabir added.

"If it is not extended, it will be seriously frustrating news for the industry as there will be very little chance for further growth and the move would not match the manifesto of the government either."