National Board of Revenue (NBR) decided to withdraw Advance Income Tax (AIT) on the import of Capital machinery importers on a larger scale following the demand from local manufacturing industries.
Currently, the exemption benefit from the payment of AIT at the rate of 5 percent was given only to that capital machinery which was exempted from payment of customs duty or enjoyed concessionary rate of customs duty.
NBR decided to extend the benefit on import of all types of capital machinery irrespective of applicability of customs duty. AIT, however, would remain in place on import of capital machinery by commercial importers.
The income tax wing of the NBR will shortly issue a Statutory Regulatory Order (SRO) to this effect.
In the budget for the current fiscal year of 2019-20, the income tax wing exempted only the capital machinery importers in the manufacturing sector from payment of the AIT at a rate of 5.0 percent as they were enjoying concessionary rates or exemption from payment of CD.
NBR already requested its income tax wing to incorporate the provision on AIT waiver in the automated system for customs data (ASYCUDA) for making the benefit available. Bangladesh entered the ASYCUDA world operations to put in place an innovative, effective and efficient customs clearance process.
There are different customs duty rates on import of capital machinery ranging from 1.0 percent to 25 percent. Some of the manufacturing industries depending on their nature of products and areas enjoy reduced or concessionary rates at 1.0 percent. Others have to pay customs duties at higher rates such as 5.0 percent, 10 per cent, 15 percent and 25 percent.
Capital machinery for power and energy sector, agriculture, local motorcycles, refrigerators, air conditioners, etc is enjoying concessionary rates. As per an SRO, capital machinery under the 662 HS code enjoys concessionary rates of customs duty on import.
However, AIT is adjustable with the actual payable taxes at the time of submission of tax returns.