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“A selective and timebound use of tax incentives and subsidies can also provide support to the growth of other promising export-oriented industries.”

The NBR provides the opportunity to import a large portion of capital machinery, and industrial raw materials at reduced import tariffs. Besides, it offers special duty, VAT and tax benefits to promote industrialisation in export processing zones, economic zones, and high-tech parks.

“Several years ago, Bangladesh was dependent on imported home appliances. The tax benefits have supported the growth of domestic manufacturing of televisions, refrigerators, air conditioners, and mobile phones. Now, such imports have reduced,” said an official of the NBR.

Ashraf Ahmed, president of the Dhaka Chamber of Commerce and Industry, also said over the last few decades, tax policy support has been one of the key factors for industrialisation and job creation. Experts and businesspeople also highlighted the challenges linked with the current tax and incentive system.

Ashraf Ahmed said the key drawback of the tax policy regime is the lack of a long-term roadmap and guidance.

Tanvir of Pacific Jeans said the NBR should not change tax and other policies frequently with a view to giving a predictable environment to businesses.

M Masrur Reaz, chairman of the Policy Exchange of Bangladesh, points out that the country is yet to offer a fully conducive tax environment for businesses and investors.

“In the absence of rationalisation of the exemptions, the avoidable tax expenditure has caused the state to lose significant revenues.”

Prof Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, said it is a good sign that the government has protected domestic industries and helped them become competitive.

Now, it will have to review the existing tax benefits and incentives since the country will not be able to continue direct subsidies and cash support once Bangladesh becomes a developing nation in 2026.

“Now, it is time to set priorities and phase out exemptions,” added Rahman.