IT sector tax exemption to extend till 2027

In the budget for the 2024-25 fiscal year, the tax exemption period for the country’s blooming Information Technology (IT) sector may be extended till June 2027, partially fulfilling the demand of Bangladesh Association of Software and Information Services (BASIS) who wanted it till 2031.

Paying no heed to the International Monetary Fund’s (IMF) pressure not to extend tax holiday for the IT sector, the government has decided to continue the facility for the sector taking into consideration the immense potential it has.

Apart from this, there may be a proposal to increase the tax on SIM cards from Tk 200 to Tk 300 in the budget of the new financial year, according to the finance ministry sources.

Finance Minister Mahmud Ali will present the budget for the financial year 2024-25 in the National Parliament on June 6.

The IT sector has been getting tax exemption benefits since 1999 in 27 sub-sectors. This exemption was supposed to expire from June 30 this year. However, the entrepreneurs of the sector demanded to extend this tax exemption period at least till 2031.

On May 20, at the inauguration ceremony of the new executive committee of BASIS, the organization of Bangladesh's software producers and exporters, Salman F Rahman, PM’s private industry and investment adviser, said that the tax exemption period in the information technology sector is not ending now. It will be extended and no new tax is being levied on the IT sector in the budget for the financial year 2024-25.

According to a finance ministry source, it will be proposed to extend the tax exemption period of information technology till June 30, 2027, in the budget of the new financial year. However, the tax exemption sub-sectors are being reduced from 27 to 21.

Sources also said that according to the information received, the SIM tax in the telecommunication sector will be increased from Tk 200 to Tk 300. Apart from this, comprehensive duty may be increased by five percent for the use of mobile internet. Besides, VAT on sales of mobile handsets may also increase by five percent.

Finance ministry sources said the budget size of the new financial year may be Tk 7,96,900 crore.