Abstract
Tax incentives are tools used worldwide to enhance domestic and foreign investment and enhanced investment leads to expected economic growth. This study is an attempt to review the industrial policies and direct tax incentives of Bangladesh to have a deep insight on the congruence among them and also show some indirect impact of tax incentives on development through analyzing some fiscal and investment data. Content and document analysis method has been used to accomplish this study. Sources of data were the industrial policies, tax codes and economic surveys of Bangladesh and some scholarly articles. By reviewing some tax related aspects of industrial polices and existing direct tax incentives provided by the tax authority, it was found that incentives suggested by industrial policies and actually provided tax incentives are almost same and the changing pattern of priority sectors have been shifted to infrastructure, power and technology sectors. By observing some investment and GDP related data it is found that local private sector investments are dominant over FDI and the manufacturing sectors contribution to GDP are increasing and consistent in last 13 years.
Highlights
Policies are important guideline to help develop any country
A study was conducted on the effect of establishing Special Economic Zones (SEZ) on economic development of China (Alder, Shao, & Zilibotti, 2013) by using data from a panel of 276 Chinese cities and prefectures from 1988 to 2010 and they found that the establishment of a state-level SEZs were associated with an increase in the level of GDP of about 20%
Priority sectors of the National Industrial Policy (NIP) and incentives provided to the sectors under different sections of tax code and S.R.O.s were consistent over time
Summary
Of them tax policies and industrial policies are vital for sustainable industrial development Through these policies different tax incentives are provided for expected industrial development and industrial development leads to national development through additional contribution to GDP. In this way tax incentives and industrial development are related to some extent. In this study National Industrial Policy (NIP) 2005, 2010 and 2016 of Bangladesh and different tax incentives provided under direct taxation of that period have been reviewed to see some points of congruence among them and the impact of those incentives to investment and development are examined by observing some fiscal and investment data
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