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The government has offered tax advantages to local manufacturers of medicines, two-wheelers and three-wheelers and to the makers of electrical and electronics goods for FY26.
VAT exemption on API (active pharmaceutical ingredients) production has been extended to June 30, 2030, which will have an impact on the business of Beximco Pharmaceuticals, Square Pharmaceuticals, and Renata.
The strengthening of local capacity to make APIs will reduce dependency on imports (mostly from India and China), lowering production costs, improving medicine availability, and enhancing export potential for Bangladesh's growing pharma industry.
In the proposed budget for FY26, the government proposed removing all VATs in excess of 5.0 per cent on local production of e-bikes until June 30, 2030.
This fiscal incentive is aimed at bolstering the domestic e-bike manufacturing sector by reducing production costs and encouraging eco-friendly transportation solutions.
Listed Walton Hi-Tech Industries and Runner Automobiles will get advantage from the lower tax rate as both the companies produce/ assemble and market e-bikes in Bangladesh.
Moreover, the government has decided to exempt companies from supplementary duty on imports of certain essential raw materials for the manufacturing of refrigerators, freezers, air conditioners and their compressors until June 30, 2028.
This will support Walton and Singer Bangladesh Limited in growing their business and securing higher profits.
The proposed reduction in import duties on essential raw materials for tyre manufacturing, along with a cut in duties on imports of buses (16-40 seats) and microbuses (10-15 seats) will help Runner Automobiles and IFAD Autos. Lower import duties will bring down costs of assembling vehicles, potentially increasing market share. Lower duties may also enhance profitability.
Moreover, the withholding tax rate on oil supplied by companies involved in oil refining has been reduced from 2 per cent to 1.5 per cent. Jamuna Oil Company, Padma Oil Company, Meghna Petroleum, MJL Bangladesh and Eastern Lubricants Blenders will be benefited for this.
The supplementary duty on all types of ice cream has been slashed to 5.0 per cent from 10 per cent, which may increase the profitability of Taufika Foods and Lovello Ice-cream.
The existing VAT exemption for imports of raw materials for sanitary napkins and diapers, which are necessary for the health protection of women and children, has been extended till June 30, 2030. ACI Limited is likely to see a positive impact from the measure.
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