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Investment Incentives Essay

1716 words - 7 pages

Investment Incentives
In order to encourage the inflows of FDI the government of Bangladesh offers one of the most liberal investment policies and attractive packages of fiscal, financial and other incentives to foreign entrepreneurs in South Asia. Major incentives to stimulate private sector direct investment are listed below.

Tax Exemptions
Generally five to seven years' tax exemptions are available for many business investments. However, for electric power generation tax exemptions are provided for up to 15 years.

No import duty is applicable for export oriented industry. For other industries it is 5% ad valorem.

Income Tax
Double taxation can be avoided in most cases ...view middle of the document...

The eligibility of a tax holiday is to be determined by the National Board of Revenue (NBR).
* The tax holiday facility is applicable to industries set up in Bangladesh before June 30, 2012.
* Accelerated depreciation in lieu of a tax holiday is allowed at the rate of 80% of actual cost of machinery or plant for the year in which the unit starts commercial production and 20% for the following years. The rate of depreciation is 100% for years specified by the NBR.
Concessionary Duty on Imported Capital Machinery
Import duty at the rate of 3% ad valorem is payable on capital machinery and spares imported for initial installation or BMR/BMRE* of the existing industries. The value of spare parts should not, however, exceed 10% of the total cost and freight value of the machinery. Out of this, 3% rate of duty payable, export-oriented industries and industries in the under developed areas, may enjoy a further concession of the import duty in the following manner:
100% export oriented industries | : | No import duty is charged in case of capital machinery and spares listed in NBR's* relevant notification. However, import duty at 3% is secured in the form of a bank guarantee or an indemnity bond to be returned after installation of the machinery. |
Minimum 70% export oriented industries in developed areas | : | Import duty at 2.5% is charged in case of capital machinery and spares listed in NBR's relevant notification. Additional duty at 5% is secured in the form of a bank guarantee or cash deposit to be returned after installation of the machinery. |
Minimum 70% export oriented industries in developed areas | : | Import duty at 5% is charged in case of capital machinery and spares listed in NBR's relevant notification. Additional import duty at 2.5% is secured in the norm of a bank guarantee or cash deposit to be returned after installation of the machinery. |
Other industries outside developed areas | : | Import duty at 5% is charged in case of capital machinery and spares listed in NBR's relevant notification. Additional import duty at 2.5% is secured in the form of a bank guarantee or cash deposit to be returned after installation of the machinery. |
Othe industries in developed areas | : | Import duty at 3% is charged in case of capital machinery and spares listed in NBR's relevant notification. |

Value Added Tax (VAT) is not payable for imported capital machinery and spares. Duties and taxes on import of goods which are produced locally will be higher than those applicable to import of raw materials for producing such goods.

Non-Resident Bangladeshis (NRBs)
Special incentives are provided to encourage non-resident Bangladeshis for investment in the country. Non-resident Bangladeshi investors will enjoy facilities similar to those of foreign investors. Moreover, they can buy newly issued shares/debentures of Bangladeshi companies. A quota of 10% has been fixed for non-resident Bangladeshis in primary shares....

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