To compensate for the loss during the stagnated Covid-19 situation, the government's revenue authorities have reduced corporate tax from 30 percent to 10 percent for a few manufacturing companies.
Manufacturers of refrigerators, complete freezers with spare parts, motorcycles, air-conditioners and their compressors will enjoy a 10-per cent concessionary tax rate on their incomes for the period after the date of commencing commercial production, according to the National Board of Revenue (NBR) notification.
As a measure for the manufacturing sector to flourish, on conditions, local manufacturers of freezers, refrigerators, motorcycles, compressors and air conditioners (AC) will enjoy the benefits for a longer-term until June 30, 2032.
The income-tax wing under the Internal Resources Division (IRD) recently issued a Statutory Regulatory Order (SRO) to give effect to the cut-down corporate-tax rate.
At present, unlisted manufacturers and manufacturers of electronic products on the stock exchange have to pay 30 percent tax on their income but the listed companies have to pay 22.5 percent corporate tax.
The circular, signed by the NBR chairman Abu Hena Md. Rahmatul Muneem, said the tax on industrial establishments capable of manufacturing complete freezers, refrigerators, motorcycles, air conditioners and compressors, including spare parts, has been reduced to 10 percent no conditions. In this case, from the date of commencement of commercial production, this tax will be applicable only on the income earned from industrial business.
However, manufacturing companies will have to be registered under the Company Act 1994, have capacities to manufacture mold and dice on their own, have their own polyurethane foaming plant, powder-coating plant and waste- management plant, the SRO says.
The company will have to invest at least 10 percent of its tax-exempt income within the next three years in its industry or new industrial undertaking.
The 'investment' has been defined in the SRO as increasing own production capacity and purchase of machinery for constructing physical infrastructure.
The beneficiary organization has to invest in increasing production capacity or buying new equipment or setting up another factory within three years. In this case, one has to invest 10 percent of the exempted income, and must also submit appropriate documents supporting the investment, according to the NBR.
The SRO also states the exemption granted by the NBR will be revoked if any of the exempted industrial establishments fails to comply with the conditions.