The National Board of Revenue has exempted automobile manufacturers from payment of value-added tax and supplementary duty on import of raw materials and spare parts for producing motor car and motor vehicles with engine capacity up to 1600cc in the country.
The sector would also enjoy the benefits on import of complete knocked down (CKD) motor car up to 1600cc and would get VAT exemption at local production stage on fulfillment of some conditions.
Officials said that NBR offered the tax exemption facility to the sector for two years up to June 2021 starting from July 2019 to encourage car production in the country and attract foreign direct investment in the sector.
Manufacturers and assemblers would, however, have to pay 5 per cent advance tax at import stage.
Value-added tax wing of NBR on 13 June issued a statutory regulatory order offering the benefit along with other rules and regulations as part of national budget for the fiscal year 2019-2020 which finance minister placed in the parliament on the day.
A Chattogram-based large firm has also applied to NBR seeking the benefit as the company was assembling Malaysian Proton Saga car in the country.
Though the state-run Pragati Industries Ltd also assembles SUVs and cars, it would not be able to avail the benefit as it usually assembles higher engine capacity motor vehicles.
According to the SRO, manufacturers would need to have some machinery for producing some basic raw materials including reinforcement pipe, reinforcement bracket, fuel tank cover, battery seal, engine hook and condenser fixing bracket.
The plant would also have to have some machinery such as four pole lifter, jib crane, brake force reader, air compressor, 3D wheel alignment machine, fuel dispenser, universal diagnostic tools and automatic pneumatic air gun.
The NBR said assemblers would also have paint shop approved by the actual manufacturer of the brand. Also, assemblers would have to use locally made battery and tyres based on approval of the actual manufacturer.
They would also have to follow Euro 3 Emission Standard to ensure environment friendly production process.
There should be a technical assistance agreement between manufacturers and assemblers to develop skilled workforce and technology transfer.
The rate of value-addition should be at least 30 per cent and at least 250 employees of total manpower should be Bangladeshi for availing the benefit.
The amount of investment should be raised to Tk 500 crore within one year of obtaining the duty benefit.
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