Several tax exemptions for local industries

Finance Minister AHM Mustafa Kamal has proposed a series of VAT, customs duty and tax exemptions in the proposed budget for FY 2022-23, in a bid to promote industrialisation, create employment, facilitate business, protect local industries and attract foreign investments.

The proposed revenue earnings for FY23 has been estimated at Tk 4,33,000 crore. Of this figure, The National Board of Revenue (NBR) will collect Tk 3,70,000 crore, while the rest of the Tk 63,000 crore will be collected from other sources.

During his budget speech in Parliament on Thursday, Kamal said, “The government is determined to simplify the process of doing business and promote a business-friendly environment.”

He proposed a reduction in the rate of tax at source on supply of trading goods from 7 per cent to 5 per cent, and on supply of books, except government supply, from 7 per cent to 3 per cent.

In order to reduce the cost of production in industries, Kamal also proposed to cut the rate of tax at source on supply of raw materials to manufacturers from 7 per cent to 4 per cent.

Kamal said economic integration, formalisation of the economy and ease of tax compliance is of utmost importance to the national economy. To this end, he proposed to fix the rate of investment tax rebate at 15 per cent on eligible amounts.

He proposed the withdrawal of advance tax on import of gold with a view to encouraging import of gold through formal channels and discouraging gold smuggling in the country.

The prevailing tax rate for the textile sector stands at 15 percent, and the SRO to this effect expires on June 30, 2022. The minister proposed to extend this facility until June 30, 2025.

Kamal proposed withdrawing full exemption and imposition of 5 per cent VAT at the local manufacturing stage on refrigerators and freezers and to continue existing exemption facilities on imported and local purchase of raw material and equipment till June 30, 2023.

He proposed an extension of existing VAT exemption facility for production of compressors of refrigerators and freezers till June 30, 2025. He proposed that in case of manufacture of API, VAT exemption at local manufacturing stage and VAT (including Advance Tax) and Supplementary Duty exemption on import and local purchase of raw materials be extended till December 31, 2025.