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Tax holiday facilities for new industries may go
S M Jahangir
4/6/2005
The existing tax holiday facilities for new industrial units are likely to go from next year despite strong opposition from the country's trade bodies.
Officials with the National Board of Revenue (NBR) indicated that the Board would back a Revenue Reforms Commission (RRC) proposal on discontinuation of the on-going tax holiday facilities from next year.
A separate form of tax for the newly established industrial units may come up in the government's budgetary proposals for the 2005-06 fiscal, they added.
"We are considering adopting a new policy on the existing tax holiday provisions in line with the recommendations by the RRC to recoup the government's huge revenue losses caused by the provision," a senior NBR official told the FE.
Referring to the official figures, he said the government has been deprived of Tk 10 billion revenue annually because of the tax holiday provision.
The RRC's proposal for discontinuing the tax holiday facilities has already got the Finance Ministry's nod, said an official source.
With the proposal, the NBR is going to introduce a fresh tax provisions for the newly set-up industrial units.
As the existing tax holiday facility comes to an end in 2005, the newly set-up industrial units will be brought under tax net, said the NBR official.
"Nothing will be free for long" said the official while talking to the FE.
The official hinted at the possibility of reasonably reduced rate of tax being imposed on such industries.
Besides, the NBR is also considering setting some tax slaves on the industrial units on the basis of lengths of their operations, said the official without going into details.
The tax holiday facilities have been allowed to continue for a long time in the interest of the country's industrialisation, limiting the government's tax base, another official source said.
An official study revealed that around Tk 140 billion in revenue has been lost due to tax holiday facilities over the past 30 years.
Revenue officials, however, admitted that the government was adopting a new policy on tax holiday in line with its on-going reforms in the tax administration.
The government has already initiated some reforms in revenue administration to help boost its international resources as per the prescription by the International Monetary Fund (IMF).
"The move to discontinue the tax holiday aims at enhancing the government's revenue collections through expanding its tax net," said a top-ranking NBR official.
Meanwhile, leading trade bodies including the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) have already urged the government to continue the tax holiday facility for few more years to facilitate the country's industrial growth.
They argue that discontinuation of the tax holiday would further enhance their operational cost for the local industrial units, especially the new ones, which would ultimately decrease their competitiveness in the global market.
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