Revised Tax Policy for Air Conditioner Manufacturers in Bangladesh
Bangladesh: The government has announced a revised income tax rate of 20% for industries involved in the production of air conditioners, along with related machinery and spare parts, effective from the 2025-2026 fiscal year. This tax policy, outlined in a notification signed by NBR Chairman Abdur Rahman Khan, will remain in force until June 30, 2032.
Currently, these industries pay a 10% income tax and an additional 2% advance income tax (AIT) on imported equipment and parts.
The government has been offering tax exemptions to these industries for a long time. Typically, these industries are required to pay a corporate tax rate of 20–22%. However, these industries have now become relatively self-sufficient. To protect domestic industries and support their self-reliance, the tax rate had been reduced over time. This reduction has now been reversed, meaning the tax exemptions have been withdrawn by the NBR.
In January 2023, the IMF approved a USD 4.7 billion loan for Bangladesh, contingent on significant tax reforms to boost revenue. For the 2024-2025 fiscal year, the IMF urged an additional Tk 12,000 crore (USD 0.98 million) in revenue, alongside subsidy reductions and arrears settlement in the electricity and fertilizer sectors. Bangladesh’s tax-to-GDP ratio remains the lowest globally, with Tk 163,000 crore (USD 13.41 billion) in tax exemptions contributing to fiscal deficits.
Source: United News of Bangladesh