NBR cuts AC, freezer, motorcycle producers’ corporate tax to 10%

The National Board of Revenue (NBR) has reduced corporate tax to 10 per cent for companies manufacturing air conditioners, freezers, refrigerators, compressors, and motorcycles for 11 years.

It issued a statutory regulatory order (SRO) last week in this regard, saying the tax has been reduced under the Income-tax Ordinance 1984 with certain conditions.

Presently, listed companies manufacturing these items pay 22.5 per cent tax, and non-listed ones 30 per cent.

The exemption will apply to taxes on income earned from the commencement of commercial production by companies manufacturing complete freezers, refrigerators, motorcycles, air conditioners, compressors, and their spare parts till June 30, 2032.

The conditions are that the company should be registered under the Companies Act 1994 (Section 18) and capable of making mould and dice.

It should have its own poly urethane foaming plant, powder coating plant, and waste management plant. It should have the NBR approval.

Besides, 10 per cent of the exempted income should be invested back in the company or a new one within three years after the end of the income year.

The company should comply with the provisions of the tax ordinance. If it gains any income as per Section 30 of the ordinance, it should pay income tax.

Moreover, the company cannot be an industrial enterprise formed by the restructuring or division of its existing business or transferring machinery from another business in Bangladesh.

The tax exemption may be revoked if the company fails to comply with the conditions, the SRO said.

“It is a great incentive for local manufacturers of electronic and tech-based products to grow further both in domestic and foreign markets,” Walton Hi-Tech Industries Managing Director Golam Murshed told The Business Post.

The government is providing different types of policy support to expand local industries, and the cut in income tax will definitely be a good opportunity for manufacturers, he said.

“We welcome the decision. We also request the government to continue the existing support and prepare a long-term tax policy on making investments,” he also said.

He added, “On top of that, our target is to explore new markets abroad as part of product diversification. With the current policy, we are doing better in export markets, and the new initiative will give us a further boost in business.”

Currently, four local companies manufacture motorcycles while half a dozen produce air conditioners and freezers.