NBR faces IMF pressure to withdraw ICT tax exemption

The country’s income from the ICT sector at present is $1.9 billion. The sector has generated 20 lakh job opportunities in addition to 6.5 lakh freelancers. Start-up investment now stands at $ 5,000 million. All these achievements have been made due to the government’s business-friendly policies in this sector.

But the International Monetary Fund (IMF), as part of its conditions to provide loan, is now pressurizing the National Board of Revenue (NBR) to withdraw the tax exemption provided to the information and communication technology (ICT) sector.

IMF officials set the condition during a meeting with income tax, VAT and customs officials at NBR Bhaban at Agargaon in the capital on Sunday (April 28), said an NBR official who participated in the meeting.

The official, on condition of anonymity, said, “IMF mission has suggested to withdraw all kinds of tax exemption to this sector within the next three years. As the tax exemption term to ICT sector ends in the current 2023-24 fiscal year, IMF has recommended not extending the tax exemption period.”

At the meeting NBR officials presented the current situation of the ICT sector to IMF. They argued that as the sector has progressed a lot due to tax exemption, it should be kept in place. But the IMF mission did not agree to NBR’s proposal.

Earning $ 45 billion foreign exchange from the ICT sector is a long-term goal of the government. Sector insiders think that if tax exemption is withdrawn, the sector’s growth will be severely hampered. In this context, ICT Minister Junaid Ahmed Palak has sent a letter to the NBR, requesting to extend the tax exemption facility to this sector to 2030.

According to the letter, despite the positive growth of the IT industry in Bangladesh, entrepreneurs or businessmen still face various challenges to sustain their business. The process of market creation for sustainable business is ongoing.

However, due to rising inflation and other factors, it is not certain. Global corona pandemic and its far-reaching negative effects have also left the businessmen of this sector at a difficult situation. The tax exemption period to this sector is going to end in this year, which discourages investors from making long-term investments. In this context, the ICT minister requested to keep the benefit of tax exemption in force till 2030.

The IMF recommendations also includes implementation of 15 percent VAT against any service, removing tax exemption from RMG, footwear, LPG, mobile phone and other sectors. IMF wants to know how additional revenue can be collected from Petrobangla’s dues. Besides, the organization has talked about institutional reforms in three departments.