The upcoming budget for FY25 may close the door for whitening black or undisclosed money with an investment in hi-tech parks and economic zones (EZ) by paying 10 per cent income tax.
In the existing provision, investors are not facing any questions about the sources of their income if they invest in EZ and hi-tech parks with the special tax rate.
The National Board of Revenue (NBR) will not make further extension of the existing special tax provision for investors, which is scheduled to end by June 30 this year, say finance ministry officials involved in the budget formulation.
Investors and authorities of EZs and hi-tech parks however seek further extension of the existing provision to attract more investments.
Back in FY20, the government had offered the scope for whitening black money to draw more investment in EZs and hi-tech parks.
The existing provision reads, “No question will be asked about the sources of income fund if any company invested in establishing industries which are accompanied with manufacturing goods or services at EZs and hi-tech parks.
“The condition is the investors pay 10 per cent on their amount of investment. The provision allows investments within July 1, 2019, and it will end on June 30, 2024.”
Besides, investors in the EZs and hi-tech parks in Bangladesh may also face an end to the zero-duty benefit on imports of capital machinery, components, and construction materials from the next FY.
Such an investor will likely have to pay 25 per cent CD, 15 per cent VAT and additional supplementary duty (SD) on vehicle imports which are now fully exempted for them to attract local and foreign investments.
In that case, consumers will be paying 800 per cent duty depending on the CC of a vehicle.
In FY16, the government had announced a set of incentives for investors in EZs and hi-tech parks, including a complete tax-waiver facility on their dividend incomes.
The facilities had been provided for the EZs administered under the Bangladesh Economic Zones Authority Act 2010 and hi-tech parks operated under the Bangladesh Hi-Tech Park Authority Act 2010.
According to NBR, the offers include complete tax-waivers on a company’s dividend income, capital gains from transfer of shares and on payable royalties, technical know-how and technical assistance until 10 years of commercial operation.
The NBR then offered a 10-year tax holiday for investors and a 12-year tax holiday for the developers of the economic zones and the hi-tech parks aiming to encourage investments and promote more youth employment.
With that target, the Bangladesh Economic Zones Authority (BEZA) has so far secured approval to establish 97 economic zones across the country, comprising 68 Government and 29 Private EZs.
Feasibility studies, land acquisition and identifying area specific social and environmental initiatives are underway for these approved EZs.
The BEZA is implementing the economic zone concept with the expectation of creating direct and indirect employment for 10 million people and producing and exporting goods worth an additional $40 billion annually.
EZs have already received $1.5 billion FDIs from China, India, UK, Germany, Australia, Japan, USA, Norway, according to BEZA annual report for FY23.
Currently, 92 hi-tech parks or software technology parks or IT training and incubation centres are under construction. Among those, 11 hi-tech parks are established, where operational activities are now running, according to BHTPA annual report for FY23.
According to the report, Tk 1,123.3 crore is invested in hi-tech parks while Tk 964 crore came in as FDIs.
