NBR to review fiscal incentives offered to API industries

Six months after the publication of the 'National Active Pharmaceutical Ingredients (API) and Laboratory Reagents Production and Export Policy by the Ministry of Commerce, the National Board of Revenue (NBR) has decided to review the tax benefits offered under it.

NBR officials said that the board was not aware about those tax incentives as the commerce ministry neither obtained vetting from it nor consulted with taxmen before it incorporated the tax benefits into the national policy.

They said the industries will be able to enjoy the tax benefits once the NBR incorporates those into the fiscal policy or issues a Statutory Regulatory Order (SRO).

An 11-member committee, formed for the purpose, will scrutinise whether the tax incentives have had any impact on lowering the prices of local drugs for the consumers.

The newly-formed committee will review the national policy's taxation part and recommend for tax incentives for domestic production of API and laboratory reagents.

In May, the ministry of commerce published a policy titled 'National Active Pharmaceutical Ingredients (API) and Laboratory Reagents Production and Export Policy,' offering a string of tax waivers for the API manufacturers.

A senior NBR official said the tax incentives incorporated into the policy will be examined thoroughly to see to what extent the board can offer it.

"On the basis of the recommendations of the committee, we will decide on whether the tax benefit can be offered to the API and laboratory reagents manufacturers or not," he said.

The policy offered corporate tax holiday facility until 2032 for the API and laboratory reagents manufacturers of the country.

According to the policy, the API and laboratory reagent industries will enjoy exemption from paying advance income tax (AIT), value-added tax and VAT deduction at source on the purchase and sales of raw materials and spare parts until 2032.

They will also get duty-free facility in import, priority in getting land allocation in the government's special economic zones and export processing zones, the policy said.

API is the main raw materials for all types of drugs.

Officials said that the tax-collecting authority would review the tax benefit for API manufacturers offered by the government aimed at reducing prices of medicines and import dependency alongside exports.

VAT policy member Md Rezaul Hassan is convener of the committee.

Representatives of the income tax, customs, VAT, ministry of commerce, industry, Tariff Commission, drug administration, the Bangladesh Association of Pharmaceuticals Industries and Bangladesh API and Intermediaries Association are also in the committee.

It will submit a report with recommendations within a month.

It will analyse the prices of locally-produced API with imported raw materials and directly imported API and the impact of benefit on the national economy, particularly on the medicine sector.

It will also review the current scenario and future challenges of the sector in line with TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement and other regulations of the World Trade Organisation.

Under TRIPS regime, Bangladesh as a least developed country will enjoy exemption from the obligation of intellectual property rights issues including patent for pharmaceuticals sector up to 2032.

The country's fast-growing pharmaceuticals industry mostly depends on imported API and laboratory reagents.

Local entrepreneurs need to import more than 95 per cent of raw materials from China, Korea and India to meet the domestic demand.

Officials said the committee will scrutinise the API manufacturers' production process as per international quality, examine technology, and work flow of the industries and its standardisation.

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