Bangladesh IT sector seeks extended tax breaks
DHAKA, BANGLADESH — Entrepreneurs in Bangladesh‘s information technology (IT) sector are advocating for an extension of the current tax exemption for an additional three years.
During the Investment Climate for Smart Bangladesh seminar, the entrepreneurs said that their request is crucial in maintaining the sector’s momentum.
The current tax break for the IT sector is scheduled to end on June 30, raising worries among industry participants regarding its potential effects on the sector’s development path.
Economic impact and future prospects
The IT sector in Bangladesh currently boasts a local market size of approximately $1.5 billion annually, with export revenues around $1.9 billion.
Over 4,500 IT and IT-enabled services firms operate nationwide, employing more than 750,000 ICT professionals. These firms have collectively invested about $600 million in the industry.
Raisul Kabir, CEO of software development firm Brain Station 23 Ltd, pointed out the competitive disadvantage that could arise from imposing taxes on software exports, stating, “We export software. If tax is imposed in this sector, we will not be able to compete with other countries.”
Similarly, Mohammad Zahirul Islam, Managing Director of ICT distribution company Smart Technologies (BD) Ltd, argued for tax-free status for ICT product exports and additional support in the era of AI.
Shameem Ahsan, Managing Director of tech solutions provider eGeneration Limited, suggested a gradual introduction of taxes, proposing, “After three years of tax exemption, a tax of 1 percent to 2 percent per annum may be imposed.”
He highlighted the comparative growth rates in other countries’ IT sectors, indicating the need for stronger government policy support in Bangladesh.
Government and industry alignment
Salman Rahman, the Private Industry and Investment Advisor to the Prime Minister, expressed his support for this extension while addressing the seminar attendees.
He emphasized the importance of sustained governmental support to maintain the sector’s growth momentum.
Rahman stated, “I will talk to the prime minister regarding tax exemption in the IT sector. Withdrawing tax exemption is not even an option. We have to see whether more incentives can be offered.”
ICT State Minister Zunaid Ahmed Palak also expressed support for the industry’s demands, acknowledging, “We agree with the logical demands of businessmen in this sector. The tax exemption in the IT sector should remain as it is.”
He outlined the government’s ambitious target to export $5 billion in this sector by 2029, which he believes will require continuing tax exemptions and a strategic policy approach in three phases up to 2041.
