In Bangladesh, the government offers tax holiday incentives to encourage investment in various industrial sectors, aiming to promote economic growth and regional development. These incentives vary based on the location of the industry and the specific sector involved.TBS News+3Wikipedia+3Dhaka Tribune+3
Duration and Scope of Tax Holidays:
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General Industries: Industries established in developed regions, such as Dhaka and Chittagong (excluding certain hill tracts), are eligible for a tax holiday of 5 years. The tax exemption schedule typically starts with a 100% exemption in the first year, followed by 50% in the subsequent two years, and 25% in the fifth year. B2B Hub+2Dhaka Tribune+2Scribd+2
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Less Developed Regions: Industries set up in less developed areas receive a tax holiday of 7 years, with a structured exemption rate starting at 100% in the first three years, 50% in the next three years, and 25% in the seventh year. Business Post+2Dhaka Tribune+2Scribd+2
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Least Developed Regions and Export Processing Zones (EPZs): Industries located in the least developed areas and EPZs can enjoy tax holidays for 9 to 12 years, with full exemptions in the initial years, gradually decreasing over the tenure. Wikipedia+3Scribd+3Dhaka Tribune+3
Recent Developments:
In an effort to enhance industrialization and export earnings, the Bangladesh Economic Zones Authority (BEZA) has approved the establishment of 29 private economic zones, with eight already operational. Investors in these zones are granted a 10-year tax holiday, which includes a full tax waiver in the first three years, followed by 80%, 70%, and 60% exemptions in the subsequent years.
Expansion of Eligible Sectors:
The government has extended tax holiday benefits to additional sectors to diversify industrial growth. Recent amendments include seven new sectors alongside the existing 26, aiming to attract investment in areas such as manmade fiber production and motorcycle manufacturing. These sectors are now eligible for tax holidays ranging from 5 to 10 years, depending on their location and compliance with specified criteria. Dhaka Tribune
Special Considerations:
The government has also extended tax holiday facilities to private power generation companies. Companies that commence commercial production by June 30, 2024, are exempt from income tax for the first five years, with reduced rates in the subsequent years. Additionally, these companies benefit from exemptions on royalties, technical fees, and capital gains taxes. Business Post+1TBS News+1
Policy Discussions and Reforms:
There is an ongoing dialogue regarding the effectiveness and impact of tax holiday policies. Discussions focus on ensuring that these incentives align with national development goals, promote equitable regional growth, and attract investments in high-priority sectors. Recommendations include revisiting the policy to extend support to emerging sectors and conducting comprehensive analyses of the economic benefits of tax holidays. Dhaka TribuneBangladesh Post
These tax holiday initiatives are part of Bangladesh’s broader strategy to stimulate industrialization, create employment opportunities, and enhance export revenues, thereby contributing to the nation’s economic development.