The tax administration reduced the corporate tax to 10% for manufacturers of freezers, refrigerators, motorcycles, compressors and air conditioners until June 2032 with the aim of further boosting the growing home electronics industry and of the automobile.
Currently, unlisted assemblers and manufacturers of electronics pay 30 percent tax on their income while listed companies pay 22.5 percent tax.
The sharp drop in the tax rate comes as a number of local businesses assemble world-famous brands and create their own brands to meet the growing demand for convenience in both rural and urban areas.
The manufacture of appliances and bicycles is another addition to the list of sectors, namely ready-to-wear and textiles, energy, IT and ITES, the pharmaceutical sectors for which the government has removed taxes to encourage industrialization, employment and accelerate economic growth.
For appliances and motorcycles, however, the National Board of Revenue (NBR) has added certain conditions for factories to qualify for the tax lien.
Factories will need to have their own mold making and diving facilities, polyurethane foam factory, powder coating factory.
At the same time, companies will need to have their own waste treatment plants to benefit from the reduced tax that will be available from the date commercial production begins, according to the NBR notification issued on October 21.
Businesses will also need to invest at least 10 percent of the exempt tax in manufacturing plants to increase production capacity or purchase new machinery or establish other factories within three years of the end of the income year. .
They must also submit the appropriate documents justifying the investment, the tax administration said.