Ranjan Kumar Bhowmik rena Former Member National Board of Revenue 5 e 7 2 g gz incentive was restricted for the ith an apparent intention of withdrawing the tax holiday incentive since 1993.96, ‘) Type of Industries eligible for tax holiday, ‘Two types of industries are eligible to apply for tax holiday: - |. Industrial Undertaking; 2. Physical Infrastructure facility Tre ctullowing categories of industries are eligible for the defin Undertakings Op, Active pharmaceuticals ingredient industry and radio pharmaceuti 02. Agriculture machineries; 03. Automatic bricks; 04, Automobile; 05, Barrier contraceptive and rubber latex: n_of Industrial icals industry; TaxHlolidsy prepared by Ranjan Kumar Bhowmik ena be96. Basic components of electron; i orev anal my eatonies (€.g. resistance, capacitor, C7. Bi- cycle including pats thereof 8. Bio-ertilizer, Pt ‘ereofs 09. Biotechnolo 10. Boi transistor, integrated Poller ft y based Agro products; ‘ct including parts and equi 7 Coase and equipment thereof; including parts thereof, 12. Computer hardwares, . Furniture; 14. Home appliances (blender, rice i i machine, induction ge water fired NONANe ove, cette oven, washing 15. Insecticide or pesticide; 16. Leather and leather goods; 17. LED TV 18. Locally produced fruits and vegetables processing: 19. Mobile phone : ay 20. Petro-chemicals; 21. Pharmaceuticals; 22. Plastic recycling; 23. Textile machinery; 24. Tissue grafting; 25. Toy manufacturing; 26. Tyre manufacturing; 27. Electrical ‘Transformer 28. Artificial fiber or manmade fiber manufacturing 29.Automobile parts and components manufacturing 30.Automation and Robotics design, manufacturing including parts and components 31-Antificial Intelligence base. system design and/or manufacturing; 32.Nanotechnology based prosucts manufacturing; 33.Aireraft heavy maintenanc.. services including Parts manufacturing, 34. Any other category of indu ies as the Govt. may notify in the official Gazette, The Folk ories are within the m of Physical infrastructure faci 01. Deep sea port; 02. Elevated expressway; 03. Export processing zone; 04. Flyover; 05. Gas pipe line; 06. Hi-tech Park: 07. ICT village or software technology zone; 08. IT Park, ; 09, Large water treatment plant and supply through pipe line; 10. Liquefied Natural Gas terminal and transmission line; 11. Mobile phone tower ot tower sharing infrastructure; 12, Mono-rail; id transit; : te oa energy (c.g. energy saving bulb, solar energy plant, windmill) 15, Sea or river port 16, Toll Road or bridge; 17, Underground ral; 18, Waste treatment plant; or 19. Any other category of industries as the Govt. may notify in the official Gazette,(2) Pr holiday for Area Years Rate of exemption Fit is established from | If itis established from 01/7/13 to 30/6/19 01/7/19 to 30/6/24 @ Dhaka, Mymensingh and 100% _| First year 90% Chittagang, division Second year _| 80% (excluding Dhaka, Third year 60% Narayangonj, Gazipur and| 5 Fourth year | 40% Chittagong district and also Fifth year 20% the hill district of Rangemati, Bandarban and Khagrachari) (b) Rajshahi, Khulna, Sylhet, “100% | First year and | 90% Rangpur and ~—_ Barisal 10% __| Second year divisionfexcluding city 5% _| Third year 80% corporation area] and the hill 10% __| Fourth year 10% district of Rangamati, 25% _| Fifth year 60% Bandarban and Khagrachari | 10 [yt 10 year------20% _| Sixth year 30% Seventh year | 40% Eighth year 30% Ninth year 20% Tenth year | 10% Provided that bio-fertilizer industry and petro-chemical industry will get tax holiday for 5 years even if itis set up in the district of Dhaka, Narayangonj, Gazipur and Chittagong. ¢ location (3)_Period of tax holiday for physical infrastructure facility irrespective of th __ Rate of exemption Ifit is established within 30/6/19 Ifit is established from 01/7/19 to 30/6/24(4) Con: Some conditions are required to be fulfilled for getting tax holiday under section 46BB and AGC of the Income Tax Ordinance, 1984, These are as follows: - (@) The undertaking must be owned and managed by either a body corporate established by or under an act of parliament with its head office in Bangladesh or a company as per Companies Act, 1913/1994 with its registered office in Bangladesh having a subscribed and paid up capital of not less than taka 20, 00,000/-(Tk. Twenty lakh) on the date of commencement of commercial production or operation. (b) The undertaking is not formed by splitting up or by reconstruction or reconstitution of business already in existence or by transfer to a new business of any plant and machinery used in business, which was being carried on in Bangladesh at any time before the commencement of the new business. (©) The undertaking must be approved by the NBR for the purpose of tax holiday. (@) The undertaking shall have to obtain clearance certificate from the Directorate of Environment for the relevant income year. (5) Application procedure and its disposal by the NBR. (a) Tax holiday application is to be submitted to the NBR within 6 months from the end of the month of commercial production or operations in the form prescribed in Rule 59A, in duplicate, duly signed and verified by the MD or Director of the company. (b) NBR shall give its decision within 45 days from the date of receipt of the application by the Board, Otherwise, the undertaking shall be deemed to have been approved. (©) NBR shail not reject any application unless the applicant is given a reasonable opportunity of being heard. (@ If NBR rejects any tax holidey application, the undertaking can submit a review application to the Chairman of the Boa; within 4 months from the date of receipt of the rejection letter. Chairman then will either review himself or will constitute a committee consisting of 3 Member of the NBR who will review its previous decision and pass such order as it think fit. There is no time limit for disposal of the review application. The decision of the review committee of the NBR as tinal and conclusive and there is no scope to submit further review application. (©) Documents to be submitted with tax holiday applicat The following documents are to be submitted along with tax holiday application: - (1) An attested copy of certificate of incorporation; (2) Anattested copy of the Memorandum and Articles of Association of the company; (3) A certificate of commencement of business; (4) In case the company has already commenced business, certified copy of the audited balance sheet and profit and loss accounts for the period for which the accounts have been prepared: (5) In case of industrial undertaking/physical infrastructure facility for which approval is sought has been acquired for another party, an attested copy of the agreement between the applicant company and the seller enters into for the acquisition of the industrial undertaking/physical infrastructure with list and value of assets acquire; (© A certificate tothe effect thatthe industrial undertaking/physical infrastructure facility has rot applied or shall not apply for accelerated depreciation allowance under paragraph 7 or 7A of the Third Schedule to the Ordinance. ‘texHoliday -—_prepared by Ranjan Kumar Bhowmik FMA ‘as amended up to 15/8/2021 Page dof 6nditions to be fulfill r get is (2) The profits and gains of the tax holiday company shall be computed separately; (b) Any loss during the tax holiday period cannot be carried forward beyond the tax holiday period. (©) Only normal depreciation is applicable for tax holiday enjoying companies (@ 30% + 10% = 40% year wise'tax holiday income is to be reinvested. 30% is to be reinvested in the same company or in a new industry within the tax holiday period or maximum within 1 year from the end of the tax holiday period. Another 10% is to be reinvested in the shares of listed company in each year within 3 months from the end of the income year. Otherwise, income of the year or years will subject of tax. However, the quantum of reinvestment will be reduced by the amount of dividend if declared by the ‘company. (© Company shall not employ/allow any foreign national to work without prior approval from the BIDA or any other competent authority of the Govt (f) The income of the tax holiday company under the following heads are taxable; _ (1) Capital gain (2) Any income arising from the disallowances u/s 30. (3) Dividend is taxable at the hand of shareholders (8) Withdrawal and Cancellation of tax holiday. a) Any undertaking after getting tex holiday from the NBR can write to the NBR for cancellation of tax holiday within | year from the date of granting such tax holiday. b) NBR may also cancel/suspend fully/partally any tax holiday in the public interest ¢) The DCT in the course of assessment may also withdraw the tax holiday from the relevant tssessment Year if he is satisfied that one or more of the required conditions are not fulfilled. 4) Tax holiday shall be deemed to have been withdrawn forthe assessment year in witich the following transaction is made: - (1) If the company is engaged in any commercial transaction with another ecmpany having one or more sponsor shareholders. Q) If the DCI finds that the company has purchased or sold goods at higher/lower price than the normal market price with the intention to reduce the income of another ‘undertaking/company. {G) If the DCT finds that the company employediallowed any foreign national to work «without prior approval from the BOI or any other competent authority of the Govt. ‘ax exemption on income of cinema hall/Cineplex and industry producing rice bran oil (6% Schedule (Part-A) Para 44 and 45) Income of cinema hall/Cineplex and income from industry producing rice bran oll will also be tax free like tax holiday but without any tax holiday application to NBR if it starts commercial exhibition/production within 01/07/2012 to 30/06/2024. Time and condition of tax exemption is tabulated below: ‘Area Years Rate of exemption %) Dhaka, Mymensingh and Chittagang Tst2 years. division (excluding the hill district of) 5 ‘2nd 2 years. Rangamati, Bandarban and Khagrachari) Last year. (b) Rajshahi, Khulna, Sylhet, Rangpur and Barisal division (including the hill district of | 10 Rangamati, Bandarban and Khagrachari) ‘textoidny __popared by Ranjan Kumar Bhownik Fema ss amended upto 15782021 Page of10)Tax exemption on income of industry set up at EPZ: Industries set up at EPZ (including private EPZ) from 01/01/2012 onward will automatically get tax exemption as per SRO no 219 dated 04/7/2011. The area and period of tax exemption is tabulated below: ‘Area Years Rate of exemption (@_ Dhaka, Mymensingh and Chittagang division (excluding the hill district of] 5 Rangamati, Bandarban and Khagrachari) (©) Rajshahi, Khulna, Sylhet, Rangpur and Barisal division (including the hill district of | 7 Rangamati, Bandarban and Khagrachari) (11) Tax Exemption for industries set-up at Economic Zone and High-Tech Park: Industries set up at Economic Zone and High-Tech Park will automatically get tax exemption as per SRO no 226 + 228 dated 10/8/2016. The period of tax exemption is tabulated below: Year Rate of exemption First year, Second year and Third year 100% Fourth year «80% Fifth year - 70% a ‘Sixth year | 60% | ‘Seventh year 50% Eighthyear a 40% Ninth year ; 30% Tenth year 20% (12) Ten years full tax holiday upon fulfillment of certain condi Ten years full tax holiday has been given to the following sectors if certain conditions are fulfilled: 1. IT Hardware manufacturer [SRO no 163 dated 03/6/2021] 2. Argo Entrepreneurs [SRO no 164 dated 03/6/2021} 3. Light Engineering Industries [SRO no 166 dated 03/6/2021] 4, Home Appliances [SRO no 167 dated 03/6/2021] 5. Skill Development Institute [SRO no 168 dated 03/6/2021] 6. Hospital [SRO no 169 dated 03/6/2021] 7. Factory of 3 or 4-wheeler [SRO no 170 dated 03/6/2021] The End