The Bangladesh government’s decision to revoke the 10-year tax holiday for new investors in private economic zones and hi-tech parks has raised concerns among businesses and investors. Effective from the upcoming fiscal year, this move removes incentives previously crucial for attracting Foreign Direct Investment (FDI) and fostering export growth, targeted at achieving a $40 billion annual export target.
Under the new policy, state-established economic zones retain the tax holiday for new investors only, with other zones now subject to a 1% customs duty on imports of capital machinery and raw materials. This change aims to prevent misuse of tax incentives and increase revenue, impacting sectors previously enjoying exemptions totaling Tk4,022 crore in fiscal year 2021-22.
Investors, including major industrial players and associations, have expressed apprehension, fearing loss of investor confidence and potential relocation of foreign investments. They advocate for reinstating previous benefits to sustain economic zone viability and attract continued FDI amidst Bangladesh’s industrialization goals and LDC graduation preparations by 2026.
Source for more details:
