The government is extending the tax exemption facility for five new IT sector services in the upcoming fiscal year aiming to take the dream of building a digital Bangladesh one step further.
At the same time, tax exemption benefits may be given to the light engineering industry and skills development to reduce import dependence, according to sources in the finance ministry.
Currently, 22 IT-enabled services enjoy the tax exemption facility.
The five new services are: cloud service, system integration, e-learning platforms, e-book publications, mobile application development services, and freelancing.
This will create new entrepreneurs on the one hand. On the other hand, the digital transformation of Bangladesh's economy will be accelerated.
As a result, advanced digital services can be made available to people at a low cost.
Syed Almas Kabir, president of Bangladesh Association of Software and Information Services (BASIS), told The Business Standard that the extended tax exemption will encourage and expedite the growth of the IT industry.
"The IT industry requires a revision every year as some new services keep adding to our life which have to be incorporated. Providing tax exemption to the sector will drive more investment which is good for the industry," he said.
Currently, around 1,600 software and IT companies are operating in Bangladesh, according to BASIS. Of them, around 250 export ICT goods amounting to $800 million to 60 countries per annum.
According to USAID, North America is the main destination for Bangladeshi software and ICT products.
The country generates almost 35% of its revenues from buyers in American and 15% in the UK. Earnings also come from some European countries such as Denmark and the Netherlands, added the US agency.
Sector stakeholders said there is a lot of software, which is not made in the country. Such software is imported from abroad by paying 25-58% duty. As a result, the price of that software is much higher in the country. But due to tax exemption, such software will be available at affordable prices.
The IT sector services currently enjoying tax exemption include software development, software or application customisation, NTTN, digital content development and management, digital animation development, website development, website services, web listing, IT process outsourcing, website hosting, and digital graphics design.
Digital data entry & processing, digital data analytics, geographic information services, IT support & software maintenance services, software lab test services, call centre services, overseas medical transcripts services, search engines optimisation services, document conversion, robotics process outsourcing and cyber security services are the other services to enjoy the facility.
The National Board of Revenue (NBR) believes that tax exemption in these sectors will accelerate the digital transmission of the economy.
Besides, new entrepreneurs will be created in these sectors. Improved digital services can be made easily and cheaply available to the public, it added.
Speaking on the tax benefits, stakeholders, and experts said this policy support, incentive, and exemption would make light engineering a bigger sector in the future.