The National Board of Revenue has offered manufacturers exemption from payment of value-added tax on production of capital machinery and spare parts in the country.
The NBR’s VAT wing on May 14 issued a statutory regulatory order offering the exemption to encourage domestic production of capital machinery and parts to boost industrialisation.
The benefit will be applicable for items which have been included by the revenue board from time to time in the SROs related to tax and duty benefits.
Prior to the exemption, the items were subject to VAT at the rate of 15 per cent at the production stage.
The manufacturers, however, will have to comply with some conditions, including being registered as manufacturers with the VAT department, to avail the benefit.
The rate of value-addition at the factories should be at least 30 per cent.
The applicants will also have to register as manufacturers under the Bangladesh Investment Development Authority, the Bangladesh Economic Zones Authority or the Bangladesh Hi-Tech Park Authority.
The producers must have the required infrastructure and machinery at the factory for production of capital machinery and spare parts.
The factories should not have any outstanding dues in VAT, interest or penalty under the VAT and Supplementary Duty Act-2012.
The beneficiary will have to maintain the books of accounts and file VAT returns regularly.
The NBR will have the authority to cancel the benefit if the beneficiary breaches the conditions mentioned in the Gazette notice.
The decision came amid a gradual rise in machinery and spare parts manufacturing, particularly for the agricultural and textile sectors, along with the gradual development of the light engineering sector.
The revenue board has previously offered duty exemption on the import of spare parts on various occasions to encourage domestic production of machinery and the necessary parts.
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