Tax exemption offered for investment in 7 tech-based sectors

The government has sought to extend tax holiday benefits to seven new sectors from the next fiscal year to encourage expansion of manufacturing activities, according to tax measures proposed by Finance Minister AHM Mustafa Kamal for the fiscal year 2020-21.

The tax breaks will be offered to investors who will set up plants to make electrical transformers, artificial fibre or manmade fibre, automobile parts and components, and to manufacture automation and robotics items, the minister said in the budget speech today. 

Establishment of industries for artificial intelligence, nanotechnology-based products manufacturing, aircraft maintenance services and manufacturing of parts will also come under the tax exemption benefit, according to the Finance Bill 2020.

Income, profits and gains from industries to be set up between the first day of July 2019 and the 30th day of June 2024 shall be exempted from tax payable for the period at specified rates, according to income tax law.

Currently, the government offers tax exemptions for periods of five to 10 years, depending on the location of the factories to be set up by entrepreneurs.

With the addition of seven sectors, the total number of industrial sectors eligible to enjoy tax exemptions has increased to 33, including manufacturing of active pharmaceutical ingredients, agriculture machinery, automobile, computer hardware, tyre and textile machineries.

In the beginning of the current fiscal year 2019-20, the government earlier included six new sectors to encourage manufacturing of goods, namely mobile phone, home appliances, LED television, toys and recycling of plastics in its list of sectors for tax exemption.