The National Board of Revenue (NBR) has extended the deadline for one year to enjoy five types of tax benefits up to 15 years for coal-based power companies which signed agreements before June 30, 2020 and their full-fledged commercial production before June 30, 2024.
To this end, NBR issued a Statutory Regulatory Order (SRO) on Tuesday.
According to the previous SRO, BIFPCL and coal-based power generation companies which would go into commercial operation after June 30 this year will not get tax holidays and other benefits.
The SRO states that the companies will not have to pay taxes on incomes from power generation business up to 15 years from its full-fledged production.
Furthermore, the incomes of foreign nationals working at the companies will not be taxed for next three years from the date of their arrival in Bangladesh and there will be no tax on interest payable on foreign loans taken by the company.
Companies will not have to pay taxes on royalties, technical know-how and technical assistance fees. Apart from this, the capital gains coming from the transfer of shares of the company are also exempted from tax, the SRO added.
However, the Ministry of Power, Energy and Mineral Resources in a letter requested the NBR to extend the duration for coal-based power generation companies to go into production till June 30, 2027 to get tax exemption facility.
“Due to Covid-19 pandemic and difficulties in opening letter of credit owing to forex crunch triggered by Russia-Ukraine war, the implementation of the coal-based projects has been delayed,” the letter reads.
Considering the demand for electricity and fuel diversification, the ministry requested the NBR to extend the obligatory provision for going into production for coal-based power plants by amending the SRO.
The ministry proposed incorporating the signing agreement date till June 30, 2024 and commercial operation date till June 30, 2027 for coal-based power plants to get exemption facility.
Meanwhile, Bangladesh-India Friendship Power Company (Pvt) Limited (BIFPCL) which is constructing the Rampal Power Plant in Bagerhat has requested the NBR to allow its full-fledged commercial production from June 30, 2024, extending the deadline for one year to get tax benefits. So, the decision will help the Rampal Power Plant greatly, insiders say.
“Imposing any non-IA tax without relaxing the provision would likely lead to an increase in the country’s electricity tariff and disruption in the economic growth,” said a letter sent recently to NBR Chairman Abu Hena Md Rahmatul Muneem.
The letter was signed by BIFPCL Managing Director Sayeed Akram Ullah. He has requested the revenue board to consider that Covid-19 pandemic and grid constraints in completing the commissioning work have delayed the commercial production in due time.
The Rampal Power Station, also known as the Maitree Super Thermal Power Project, is being set up by the BIFPCL, which is a joint venture between India’s state-owned National Thermal Power Corporation (NTPC) and Bangladesh Power Development Board (BPDB).
The 1,320-megawatt (MW) coal-fired power plant is being built in Rampal upazila of Bagerhat. It is the largest power plant in the country.
Earlier on June 20 this year, NBR extended the tax exemption facility for private sector power generation companies except coal-based power companies till June 30, 2036, from December 2034 and the time for power plants to go into production has been extended until June 2024 from December 2022 to get tax exemption.
