There is no 100% tax holiday or tax holiday facility. You have to pay some taxes from the first year. The new law is taking away 100% tax leave facility. As a result, tax will have to be paid on 10 percent of the total income in the first two years. Under the existing law, entrepreneurs get 100% tax leave in the first two years.
Recently, the National Board of Revenue (NBR) has released the draft Income Tax Act 2022. It called for a reduction in tax holidays. It is learned that NBR wants to start all activities including return deposit under the new law from the next 2022-23 financial year. In that case, of course, the income tax law has to be passed in the parliament before the next budget.
According to the draft income tax law, an industrial and service company will get 90 per cent tax exemption on income in the first two years after launch. The next two years (the third and fourth years of business) 75 percent; The next three years (fifth, sixth and seventh years) will be taxed at 50 percent and the next three years (eighth, ninth and tenth year) will be taxed at 25 percent.
An industry and service oriented organization will get 10 years tax leave as of now even if the new law comes into force. This is not changing. Institutions of the sectors which are usually on the list of tax leave benefits get tax leave benefits from the year of commencement of production and service activities. From the first year onwards, the company will get less tax exemption at a year-to-year proportional rate.
Currently the first year matches 100% tax vacation benefits. After that, the tax leave benefit is reduced at the rate of 10 percent every year. From the first year to the tenth year, 10 to 90 percent tax exemption is available on annual income.
Asked about this, NBR member (income tax policy) Shams Uddin Ahmed told Prothom Alo last night, “We are now discussing the draft law with various stakeholders including businessmen, taxpayers, economists and accountants.” The new rules on tax vacation benefits have not been finalized. If everyone makes a reasonable recommendation, of course, the draft will be considered and finalized.
A number of indigenous industries including medicines, leather goods, bicycles have been developed with the benefit of tax leave. About a lion’s share of the domestic market for these products is controlled by local entrepreneurs. At present, 31 sectors get tax benefits. Earlier, there were 26 sectors. Five more sectors have been added from the current fiscal year 2021–22. The newly added sectors are automotive, industrialization of agricultural products, home appliances, hospitals and light engineering.
Ability to break locks and search
Subject to the permission of the superior officer, an officer not below the Assistant Commissioner of Taxes of the NBR may search or seize any taxpayer’s income. Income records, money, precious metals, jewelry and other valuables can be searched by entering any building, place, ship, vehicle or aircraft. Even if there is no key to open a door, box, locker, safe, cupboard, the tax officials can break it and enter or search it.
Tax officials can also break through password security to retrieve information, pictures or any other data stored in electronic records and systems. You can copy income related information. The investigating officer can keep the seized documents, documents etc. for up to 180 days. However, within 90 days of the seizure of assets, an initiative must be taken to search for income. Besides, the accused person should be given a chance to be heard.