Tax benefits for IT sector likely to be extended
The government is likely to extend the tax exemption benefits for software development and information technology-enabled services (ITES) by another five years to encourage investment, said a senior official of the finance ministry.
The tax waiver on income from software and ITES may be extended to 2024 from June 30, 2019 now -- in line with the government's Digital Bangladesh vision.
The proposal is likely to be made when Finance Minister AMA Muhith places the budget for fiscal 2015-16 in parliament, officials said.
The move comes after three IT related organisations -- Bangladesh Association of Software and Information Services, Bangladesh Computer Council, and Internet Service Providers Association of Bangladesh -- jointly demanded extension of the tax break benefits till 2024 for the sake of the sector's growth.
The organisations said it is imperative to increase the tax exemption period for software and ITES to ensure continued expansion and development of the IT sector and to help the government achieve the Digital Bangladesh vision by 2021.
The incentive will attract investment from foreign investors, according to the joint proposal from the three organisations to the National Board of Revenue.
ITES, also called web-enabled services or remote services, covers the entire gamut of operations which exploit IT for improving efficiency of an organisation.
The services encompass call centres, medical transcription, medical billing and coding, back office operations, revenue claims processing, legal databases, content development, payrolls, logistics management, GIS (Geographical Information System), and human resources and web services, among others.
The IT services industry, which employs more than 20,000 people, holds great potential. The sector serves both domestic and international clients from Europe, North America and East Asia.
The freelancing community has further supplemented IT exports, raking in close to $7 million in 2010, for instance.
Bangladesh appears consistently in top freelance work locations on sites like oDesk, eLance and the likes, said a study by KPMG in 2012. It said Bangladesh's IT sector holds growth prospects owing to the international companies' hunt for low-cost outsourcing destinations.
The country offers a vast pool of young, trained and English speaking resources -- available at costs almost 40 percent lower than in established destinations like India and the Philippines.
The study said, with wages and operating costs rising in traditional outsourcing destinations like India and the Philippines, Bangladesh's prospects are rising.
The country offers attractive business opportunities for multinationals interested in outsourcing or offshoring, the KPMG study added.