National Board of Revenue has offered tax benefits to compressor manufacturers in importing raw materials and spare parts up to June, 2021 to encourage local production of the machine mainly used in air conditioner, refrigerator and freezer industry.
NBR exempted the local industries from payment of value-added tax and supplementary duty on import of raw materials and spare parts for manufacturing compressors.
There will also be no VAT on production of the product, NBR said in a statutory regulatory order issued on October 18.
Currently, compressor manufacturers have to pay 15 per cent VAT and up to 45 per cent SD on import of necessary raw materials.
In addition, 15 per cent VAT is applicable at production stage.
In a separate SRO, NBR also extended the existing VAT and SD exemption on import of raw materials and equipment to manufacturers of air conditioner (AC), refrigerator and freezer as well as production of the products up to June, 2021 from June, 2019.
VAT wing of the NBR on October 18 issued the SROs offering the benefits following a proposal from the local manufacturers.
Earlier, in July, 2017, NBR offered the tax benefits to AC, refrigerator and freezer manufacturers. The benefits were not given to the compressor manufacturers at that time.
Later, Bangladesh Refrigerator Manufacturers and Exporters Association demanded that NBR also give the benefits to the compressor manufacturers so that country’s AC, refrigerator and freezer industry could become self-sufficient and add more value in supply chain.
NBR officials said that they considered the issue positively to encourage the development of the sector.
The tax authority, however, has given the tax benefits on condition that the compressor manufacturing units must have some specific machines to avail the benefits, they said.
According to the SROs, the manufacturers will require to have sand moulding machine, induction melting furnace, heat treatment furnace, spectrometer, upper cover press machine, lower cover press machine, crankshaft grinding line, lamination annealing furnace, dip phosphating line, rotor line, life testing machine, hemi-anechoic chamber, CNC coordinate measuring machine and calorimeter.
Currently, Walton Hi-Tech Company manufactures compressors for AC, refrigerator and freezer.
Some other domestic companies including Marcel, Minister and Jamuna have also started assembling AC, refrigerator and freezer and producing various components of the items.
Global brands Samsung and LG have also entered the market in collaboration with local companies.
According to the SROs, the manufacturers will have to be VAT registered company and have registration with the Bangladesh Investment Development Authority.
A manufacturer will have to add 30 per cent value-addition in production process of the items.
They will also have to maintain books of record and submit VAT returns regularly for availing the benefit.
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