The new entrepreneurs who will invest in four agro-based sectors will get tax exemption for the first 10 years of their commercial production, an official of the National Board of Revenue (NBR) said.
The sectors are agri processing, fruit processing, milk and dairy production, and farm machinery manufacturing.
To create employment opportunities in rural areas, the government has announced a 10-year tax exemption facility for six individual sectors in agro-based industries all over the country.
Our country lags behind in innovative and diversified agro products despite having a plenty of fruits and vegetables. But the government wants to attract new investments to the sectors to encourage product diversification because the country now exports only some raw agri items, a commerce ministry official said.
It would contribute significantly in the country’s economic development, he added
Agro-based entrepreneurs who already are in the business will not get the facility even if they set up a new unit, or merge with a new venture, according to the sources.
Finance Minister AHM Mustafa Kamal proposed the tax exemption for 10 years during the budget speech he presented in the parliament on June 3, to industries engaged in processing fruits and vegetables, producing milk, dairy products and baby food entirely from locally grown agricultural products, and manufacturing of agricultural machinery included in the proposal.
To explain the reason behind the govt motivation, the minister said this country has unlimited prospects in agro-based industries. Booming of agro-based industries and to generate new investments are possible through the production of import substitute products in the country.
The facility comes with a number of conditions including the minimum investment of Tk 1 crore and tackle the drought in investment caused by the coronavirus pandemic, said the NBR sources.
“At this time of free trade, it is possible to take a substantial share of the global export market through value addition and diversification of agricultural products,” the source added.
There are a number of conditions that must be met by the new investors to qualify for the tax exemption.
The manufacturers must get registered with the Bangladesh Investment Development Authority (BIDA) and the amount of investment must be at least Tk 1 crore. Conditions have also been levied on raw material collection for the factories. The raw materials must be produced locally.
Otherwise, the manufacturing units will not get the exemption facility. On top of this, if the production and processing units face any fine by any government agency for substandard foods or unhygienic factory environment, the facility will go away.
Moreover, the investors will have to strictly follow the Income Tax Ordinance 1984 since any violation of the tax law will meet with facility revocation, and the manufacturer will be charged with the regular tax rates.
The tax exemption on defining farm machinery said any kind of equipment used for cultivation or farming. The manufacturers at their production facilities will have to add at least 30 per cent value to the imported fuel-run or electric equipment.
As a part of its move, Professor Dr Selim Raihan, Department of Economics of Dhaka University said that it’s an adequate initiative for rural population but the condition for a minimum investment of Tk 1 crore should be reconsidered because of investing Tk 1 crore is a big deal for a rural and small entrepreneur,"
Dr Raihan also said, Agro-based entrepreneurs who already are in the business should also get the facility on a limited scale to merge their activities.
According to the Agricultural Machineries Manufacturers Association, there are about 5,500 local farm machinery manufacturers in the country.