Private power generation companies that will sign agreements by June 30, 2020 to install coal-fired power plants will enjoy tax holiday and other tax-related facilities for 15 years from the date of commercial production, officials of the National Board of Revenue have said.
Those companies, which will begin commercial electricity production after June 30, 2023, will not get the facilities, they said.
On the other hand, private power plants other than coal-fired ones that will go for commercial production by December 31, 2014 will also enjoy tax exemption for 15 years from the date of operation, they added.
In both cases, the companies will enjoy tax exemption only for income that is generated from power production.
‘Bangladesh needs huge investment in power generation while there is huge potential of making investments in coal-fired power plants in the country. So the government has decided to provide tax holiday for coal-fired power plants to attract investments in related projects,’ a top NBR official told New Age on Thursday.
Such exemption will also attract investors to come up with investments for establishing power plants using alternative fuel that will reduce dependency on gas, the most important natural resource of the country, he said.
In this regard, the revenue board has already issued two separate statutory regulatory orders on July 1.
In another SRO, the NBR has also said the companies that will come into production by January 1, 2015 or later will enjoy full tax waiver for the first five years, 50 per cent for the next three years and 25 per cent for the next two years.
According to an earlier SRO, companies would get such tax benefits if they had come into production by June 30, 2013.
The government has also awarded other power plants with the same waiver to solve power crisis in the country in the shorter term.
Earlier, the power division recommended the revenue board to reintroduce the 15-year tax break facilities claiming that some private power companies had signed agreements with the Power Development Board in 2010-2011 for installation of large power plants encouraged by the 15-year tax break.
But some of these large power projects are set to miss their deadlines and will not come into operation before June 30, 2013.
It is not possible for the division to cancel or suspend the ongoing power projects and existing tenders as both will create legal complications, said the power division.
Private power generation companies will have to fulfil all the conditions stated in the Private Sector Power Generation Policy in Bangladesh, said NBR sources.
Owners of coal-fired power plants and other power plants that are entitled to enjoy 15-year tax holiday will also enjoy a set of tax benefits.
The capital gain emerged from share transfer of the company, royalties, technical know-how, and technical assistance fees will also be tax free, according to the SROs.
Income of the foreign employees in the companies will also be tax free for three years from the date of their arrival in Bangladesh, it stated.
However, the government is yet to finalise the National Coal Policy as the country had long been engaged in debates over coal extraction system and its environmental impact.
It is estimated that the country has 2.5 billion tonnes of coal deposit in five coal-mines at Barapukuria, Phulbari, Jamalganj, Khalaspir and Dighapara.
-With New Age input
