The New Nation - Internet Edition

Talha Bin Habib

Exemption of VAT and extended tax holiday are to be offered to the Small and Medium Enterprises (SME's) sector from the FY- 2008-09.

The National Board of Revenue (NBR) has taken initiatives to encourage entrepreneurs to invest more in the SME sector. NBR has sent proposal to this effect to the concerned ministry for approval.

NBR sources said SME entrepreneurs would be encouraged to investment more, if they were given wider tax holiday and VAT exemption from the inception of their investment in the SME sector.

Small entrepreneurs would be encouraged to pay VAT, if the proposed investment ceiling by the NBR for the SME sector was materialised.

As per the existing rules SME entrepreneurs enjoy VAT exemption of upto Tk 20 lakh for annual turnover and Tk 7 lakh as the value of plant machinery.

The NBR proposed to increase VAT exemption ceiling from Tk 7 lakh to Tk 15 lakh for plant machinery investment in the small and medium industries and Tk 24 lakh from Tk 20 lakh as annual turnover from the next budget with a view to attract more investment in the SME sector.

Exemption of VAT would also be given upto Tk 15 crore for purchasing machinery for small and medium industries.

According to the Industrial Policy 2005 Light Engineering, Electronic and Electrical Goods, Agro-processing, Plastic and Leather Goods, among others, were given priority as SMEs.

Tariff margin of raw materials used for SME in the country would also be reduced from the next budget.

The SME Foundation is demanding doubling the amount of allocation from the next fiscal. The rate of allocation is Tk 100 crore.

According to the Bangladesh Bureau of Statistic, SME's provide about 44 per cent employment of the country. It contributes Tk 14,940 crore to the GDP and 11 per cent of export income also came from this sector during the last fiscal 2006-07.