IT sector experts call for extended tax holiday

Industry experts yesterday called on the government to extend the tax exemption facility for Bangladesh’s information technology (IT) and IT-enabled services (ITES) sector beyond June 2027.

They said the industry needs continued policy support as it navigates rapid changes driven by artificial intelligence (AI) and other frontier technologies.

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The call came at a seminar titled Impact of Finance Bill on Telecom and Technology Industry, organised by the Technology Industry Policy Advocacy Platform in Dhaka.

The tax exemption facility for Bangladesh’s IT and ITES sectors is currently scheduled to expire on June 30, 2027. However, the national budget for the current fiscal year gives no indication that it will be extended.

The tax exemption facility for Bangladesh’s IT and ITES industry is currently scheduled to expire on June 30, 2027. However, the national budget for the current fiscal year gives no indication that it will be extended

Referring to the issue, Rashad Kabir, managing director of Dream71 Bangladesh Ltd, said: “Unfortunately, the current national budget does not provide any indication of an extension of the tax holiday period.”

“At a time when the global economy is being transformed by artificial intelligence (AI) and advanced digital technologies, it is crucial for Bangladesh to continue supporting the growth of its technology sector through such policy incentives,” he added.

Kabir, also a former president of Bangladesh Association of Software and Information Services (BASIS), noted that most IT and ITES firms face significant challenges in accessing conventional bank loans and financial facilities because they often lack tangible assets to use as collateral.

Fahim Mashroor, another former president of BASIS, presented the keynote at the seminar and highlighted important fiscal changes affecting the telecom and technology industries.

He said the Tk 300 SIM tax has been fully waived in the telecom sector. Beyond that, however, there has been little structural change, with VAT on voice and data services remaining at 15 percent and supplementary duty staying at 20 percent.

Mashroor said the removal of the SIM tax is unlikely to significantly benefit consumers, as operators typically absorb most of the financial gain.

“Since operators, not consumers, absorb most of the benefit from the SIM tax removal, the relief primarily improves operator profitability rather than lowering costs for ordinary users,” he said.

He also highlighted substantial tax reductions on several hardware products.

The total tax incidence (TTI) on laptops has fallen from 23.25 percent to 9.5 percent, while that on computer monitors has dropped from 39.6 percent to 9.5 percent.

Tax on printers has declined from 26.5 percent to 9.5 percent, while that on flash memory has fallen from 32.25 percent to below 15 percent.

These changes represent reductions in total tax incidence ranging from roughly 54 percent to 76 percent, marking one of the most significant relief measures in the budget.

However, he noted a sharp disparity in taxation across devices. Imported smartphones still face a TTI exceeding 60 percent, creating a wide disparity in tax incidence compared with laptops.

“A large part of the population uses smartphones instead of laptops to complete their tasks, meaning the majority remain outside the scope of these benefits,” he said.

Mashroor also said the startup ecosystem received significant policy attention in the budget. Support measures for startups have been broadened -- including a uniform nine-year growth period, zero turnover tax, VAT exemptions on local sales and imported services until 2035, and tax-loss carry-forward provisions.

However, he warned that oversight remains critical to prevent misuse of these incentives.

“The government should remain vigilant to ensure these benefits are not misused,” he said.

Mahtab Uddin Ahmed, former CEO of Robi Axiata, said telecom operators successfully lobbied for tax reductions on SIMs and changes to advance income tax, boosting corporate profitability while offering limited relief to customers.

He added that consumers still pay more than Tk 40 in taxes for every Tk 100 of talk time, making Bangladesh’s telecom tax burden one of the highest in Asia.