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Download PDF Tax holiday facilities to 999 industries in last two fiscal years have brought positive impact as production values were 30 times and export value 17 times more than the revenue losses due to the facilities, reveals a study by NBR.
Introduced as incentives for business investment, the system of tax holiday, which facilitates reduction or elimination of taxes, will end in June. But National Board of Revenue (NBR) last week recommended that the government continue the facilities considering its positive outcomes.
According to the NBR study, total revenue loss of the government was Tk 1,205 crore in the FY 2005-06 and FY 2006-07 due to tax holiday.
Field level survey of the study reveals that total value of the total products in the industries, which have been enjoying tax holiday facilities, is Tk 36,382 crore in the two-year period. Total export of the industries during the corresponding period was Tk 20,354 crore.
Both World Bank and International Monetary Fund (IMF) have prescribed the government for an end to tax holiday facilities to increase revenue earnings.
In a report, the IMF told the government tax holiday facilities reduce the equity and legitimacy of the tax system and contribute to the public’s cynical attitude toward the tax system by eroding the civic responsibility to pay taxes.
The NBR however referred to the similar tax holiday systems in India, Pakistan, Sri Lanka and Indonesia where the system has been contributing to industrial growth.
The NBR report has been submitted to the finance ministry with four alternatives from which the government may choose one for the next phase of tax holiday facilities.
The NBR has proposed to continue tax holiday facilities for the industrial units in Dhaka and Chittagong (except CHT) for four years and in other four divisions (Khulna, Rajshahi, Sylhet and Barisal) and CHT districts for six years.
The period would be counted from the beginning of production of a respective industrial unit.
The other option for tax holiday facilities of the NBR says industrial units in Dhaka and Chittagong (except CHT) will enjoy the facilities for five years. In such cases, the industries will get 100 percent tax exemption for first two years (from the start of production), 50 percent reduction for next two years and 25 percent in the final year.
Industries in other divisions — Khulna, Rajshahi, Sylhet and Barisal, and CHT districts — will enjoy the facilities for seven years. Any industry in these areas will get 100 percent exemption for the first three years, 50 percent for the next three years and 25 percent in the final year.
Another option proposes 5-15 percent of tax elimination of the industries up to seven years, while the fourth option proposes imposition of 0-5 percent of taxes for five years with conditions.
The conditions for all the four options say the industries will have to increase paid up capital to Tk 10 lakh from the existing Tk 1 lakh. Besides, the industries need to be equipped with tools and equipment to check environment pollution as well as waste management system.
The NBR study says individual taxpayers and industries in Bangladesh have been enjoying tax reduction facilities under 55 regulations, while 32 types of industries get tax holidays.
On average, three industrial units got tax holiday facilities from 1973 to 1975, while the number increased to 18 during 1976-1981, 102 during 1982-1990, and 185 during 1991-1994.
Average investment in the industries, which got the tax holiday facilities, were Tk 89 lakh in 1973-1975, Tk 8.7 crore in 1976-1981, Tk 141 crore in 1982-1990, and Tk 525 crore in 1991-1994.
The NBR report also shows on average the tax holiday-facilitated industries created 392 new jobs in 1973-1975, 1,267 in 1976-1981, 9,024 in 1982-1990, and 23,000 in 1991-1994.
June 30th, 2008 at 5:15 pm
Holiday… wow, i like holiday so much, And in Turkey have many many haliday place, all time
people can make swimming and same time can make ski in onether city. Than here also many historical
place all there. Who want to know some things about Turkey, i can help and can saying many
secreet place. sincerely