The government has decided to provide this exemption to fresh investors for driving expansion of the local home appliance industry and to reduce the import dependency on these products
Fresh investors in the home appliance manufacturing sector are expected to get a 10-year tax exemption in the upcoming budget of the 2021-22 fiscal year, according to an official of the Finance Ministry.
The government has decided to provide this exemption to fresh investors for driving expansion of the local home appliance industry and to reduce the import dependency on these products, said the official, requesting anonymity.
Manufacturers of kitchen appliances such as blenders, microwave ovens, other cooking equipment, washing machines, and electric sewing machines are likely to get the exemption from FY2021-22 until the end of FY2029-30.
Finance Minister AHM Mustafa Kamal is expected to disclose this at the budget assembly on June 3.
According to industry insiders, as the demand for household appliances has grown significantly in recent years, policymakers are focusing on this sector.
The size of the domestic market of home appliances is currently worth Tk10,000 crore and it comprises TVs, refrigerators, and air conditioners (ACs). Sales of microwave ovens and washing machines also surged during the outbreak of the pandemic last year.
Currently, several families in Bangladesh rely on mechanical means to wash and clean clothes regularly as a part of their fight against the coronavirus.
Moreover, the demands for kitchen appliances have also grown, according to industry insiders and retailers.
Several companies have set up plants to manufacture refrigerators and ACs while a couple are setting up facilities to make washing machines.
The firms which are already in the production of home appliances would not get the tax exemptions; only new factories are expected to get the tax break, the ministry official further said.
According to the National Board of Revenue (NBR), home appliance manufacturers get an offer of progressively declining tax breaks for five to 10 years depending on the location of the factories.
Factories in Dhaka and Chittagong divisions are entitled to tax breaks at a declining rate for five years if they begin commercial production between July 1, 2019 and June 30, 2024.
Plants in other divisions will get 10-year benefits. The rate of exemption declines gradually and is phased out by the 11th year.