Bike, AC, compressor makers get tax benefits till 2032
The National Board of Revenue (NBR) has extended the reduced tax benefit to the manufacturers of motorcycle, air conditioner and compressors to June 2032 although it doubled the rates.
Manufacturers will have to pay 10 percent tax on their incomes for the years till 2032, up from 5 percent previously, according to a gazette notification issued by the NBR last week.
For the firms that had been enjoying 5 percent tax prior to the latest move will be able to pay the same rate of tax until the expiry of the initial tenure.
And, they will have to apply to the NBR to avail 10 percent tax benefit, down from 35 percent regular tax rate for companies, according to the NBR.
The move comes at a time when seven local and foreign brands of bikes have set up manufacturing facilities and are making the two-wheeler to market locally.
Reduced tariff rates for firms to import basic raw materials and semi-finished products of bikes and the value added tax (VAT) benefit for local manufacturing offered by the NBR encouraged enterprises to set up bike-making facilities in the country, which had met its domestic requirement by importing the two-wheelers in completely knocked down form until 2010.
Similarly, a couple of local firms, including Walton, are making air conditioners and compressors to cater to a rising demand among the middle and upper middle income groups. The NBR offered the 5 percent tax privilege first in July 2009 to makers of freezers, refrigerators and motorcycles. It said manufacturers would enjoy the tax exemption for a period of 12 years beginning from the date of commercial production.
In 2010, the revenue authority included air conditioner amid demand from the sector. It added compressors to the list in its latest notification.
Motorcycle makers hailed the step, stating that the benefit would be instrumental in the development of the sector.
“We thank the government for the extension. We would have been happier had the tax rate been at the same level,” said Hafizur Rahman Khan, president of the Bangladesh Motorcycle Manufacturers and Exporters Association.
Shah Muhammad Ashequr Rahman, head of finance and commercial of Bangladesh Honda Pvt Ltd, said the reduced tax benefit would facilitate sustainable development of the industry.
“We expect the government will provide similar benefits to backward linkage sectors,” he said.
Sales of motorcycles are likely to grow 10 percent year-on-year to 5.30 lakh units by the end of this year from 4.8 lakh units the previous year.
The value of the market would be around Tk 7,500 crore, said Rahman.
“We have been seeing a downturn in the market for the last two months. It appears that many prospective buyers have become shy fearing action under the new road transport law,” said Matiur Rahman, president of the Bangladesh Motorcycle Assemblers & Manufacturers Association.
