Bangladesh Power Development Board has sought tax exemption for 15 years for the private power generation companies which will sign agreement with the government to set up power plants by December 31, 2014, officials of the National Board of Revenue said. According to the existing statutory regulatory order issued on July 1, 2013, the private power generation companies which will go for commercial production by December 31, 2014 are entitled for such tax benefits, they said.
In last week, Internal Resources Division forwarded a letter of the power, energy and mineral resources ministry along with the PDB’s proposal for amending the existing SRO for providing tax break to new power companies to the NBR.
The NBR officials said that they received the proposal and would scrutiny for further action though the revenue board had rejected such proposal in early 2012.
In the proposal, the PDB said that the government had already floated pre-qualification and requested for proposal for setting 31 independent power plants in line with Private Sector Power Generation Policy of Bangladesh in which there was no condition of starting commercial production within specific period for providing tax benefits to the companies.
The government has also mentioned in tender documents about the SRO No-114 of 1999 by which the government had provided such tax benefits to the companies without giving any specific time bar for going production of signing agreement, the PDB said.
So fixing a timeline for providing tax benefits to the companies is contradictory with the private sector power generation policy, it said.
The power plants will be set up under build, own and operate method.
The PDB said that many companies had already participated in tenders and submitted tariff proposals considering tax benefits mentioned in the policy and SRO No-114.
The government and PDB have already signed agreements with some lowest responsive bidders for setting up power plants while some contracts are in the process.
It said that most of the companies would not be able to go for commercial production by December 31, 2014 and would not get tax benefits given in the existing SRO.
In that case, according to the agreement, the PDB will have to pay the taxes applicable for the companies.
If that happens, price of electricity may go up as buying price of the item will increase because of tax payment.
According to the existing SRO, private power generation companies (excluding coal-based plants) will enjoy tax holiday and other tax-related facilities for 15 years from the date of commercial production.
The companies will enjoy tax exemption only for income that is generated from power production business.
Income of expatriate personnel working in such company will also enjoy tax benefits for three years from the date of their arrival, interest on foreign loans received by such company, royalties, technical know-how fees and technical assistance fees and capital gain on transfer of shares will also be tax free.
-With New Age input
