The government plans to offer a tax rebate of nearly 20 percent for relocation of industrial units out of Dhaka and major cities to economically-lagging regions, in the next fiscal year.
The move aims to reduce congestion in Dhaka in the face of growing migration of people from rural areas and towns to find income opportunities in the capital and its surroundings.
The increased migration though brought about a massive rise in population and affected the city's livability. Dhaka has become the second least livable city in the world, according to the Global Liveability Survey of the Economist Intelligence Unit in 2013.
“We may provide tax breaks to encourage factory relocation from Dhaka. We may consider giving more benefits to entrepreneurs who will set up plants outside Dhaka,” Md Ghulam Hussain, chairman of the National Board of Revenue, said earlier at a pre-budget meeting.
But finance ministry officials indicated that the facility would be extended to industries that do not enjoy tax holiday benefits.
Currently, the government provides tax holiday facilities to 17 industrial sectors to establish plants outside of Dhaka, Gazipur, Narayanganj and Chittagong districts.
The sectors are: active pharma-ceuticals ingredient industry and radio pharma-ceuticals industry, barrier contraceptive and rubber latex, chemicals or dyes, basic ingredients of electronic industry, biotechnology, boilers, compressors, computer hardware, energy efficient appliances, insecticide or pesticide, pharmaceuticals, locally produced fruits and vegetables processing and textile machinery.
Taxmen said the offer may encourage apparel makers to shift their factories out of the cities, mainly Dhaka, to economically disadvantaged regions, which, in turn, may facilitate increased economic activities in those areas and reduce pressure in major cities.
Dhaka and its adjacent areas house nearly 80 percent of 4,500 export oriented garment factories in the country.