Bhairahawa SEZ plans 100pc corporate tax relief

KATHMANDU, JULY 22:

Once the Special Economic Zone (SEZ) in Bhairahawa comes into operation, it will allow hundred per cent relief on corporate tax to industries within it for seven years, states the Ministry of Industry.

“Industries within the Bhairahawa Special Economic Zone will receive hundred per cent corporate tax relief,” said executive director of SEZ Shankar Man Shrestha.

According to officials at the ministry, industries within SEZ will be able to enjoy hundred per cent tax relief for seven years and subsequently the charges might change.

“Though the physical infrastructure has been built, it needs a special Act, and working modality so that it is easy to select and monitor industries within the Special Economic Zone,” Shrestha said.

According to the ministry, it is preparing to announce proposal requests from industries that want to shift to the Special Economic Zone.

“Along with the relief on corporate tax, industries will also receive uninterrupted power supply and adequate safety and security,” he said.

“The operation of the Special Economic Zone depends on how early the government brings the SEZ Act. The government should ensure facilities such as bank finance, lease facility and special Labour Act for effective operation of industries,” said vice president of Federation of Nepalese Chambers of Commerce and Industry Pradeep Jung Pandey.

The budget for this fiscal year has mentioned about the formation of a legal provision for the Special Economic Zone to promote exports by providing special facilities to export oriented industries.

The budget also mentions about the construction of infrastructure in Panchkhal and Biratnagar after the land acquisition process is over and also about developing infrastructure in Simara.

It is estimated that the Bhairahawa Special Economic Zone, whose construction started in 2008, can generate 9,100 jobs over a decade. However, in a progressive scenario it can generate around 13,300 jobs and employ 20,500 people in the best case scenario.

According to earlier studies, the Bhairahawa Special Economic Zone — the first of its kind in the country — will also fetch investments worth Rs 427.86 million in a decade in a conservative estimation, Rs 625.34 million in a progressive estimation, and Rs 883.94 million in the best case situation over a span of 10 years.

In a decade, it could earn

Rs 4.5 million revenue for the operator in a worst case scenario, Rs 6.65 million in a middle case scenario, and Rs 10.25 million in the best case scenario in 10 years.

A dozen companies are interested in shifting their base to the Bhairahawa Special Economic Zone but it depends on the government’s policy, which will decide on what type of industries will be located in the SEZ, though earlier, it had planned to house only export oriented industries.

Source: THT