Bangladesh Economic Zone Authority has sought a 15-year tax holiday for private power plants to be set up in the planned economic zones.
The BEZA in a letter to the National Board of Revenue said that the tax benefits for power plants to be established inside the economic zones should be similar to those power plants outside the zones enjoy.
The authority also sought clarification from the revenue board whether the existing 15-year tax holiday benefit the power plants outside the zones enjoy would also be applicable to the power plants to be set up in EZs as two existing statutory regulatory orders of the NBR created confusion among investors.
The NBR in 2011 offered 100 per cent tax exemption for 15 years to private power generation companies on their income from power production business.
And the revenue board in 2015 allowed income tax exemption at diminishing rates for 10 years for all types of companies established or to be established in the economic zones.
According to the NBR, EZ companies will enjoy complete income tax exemption for first three years of their business operation, 80 per cent for fourth year, 70 per cent for fifth year, 60 per cent for sixth year, 50 per cent for seventh year, 40 per cent for eighth year, 30 per cent for ninth year and 20 per cent for 10th year.
Power plants, however, have to fulfil some conditions including starting commercial operation within December 2019 for enjoying the tax holiday.
There is another tax incentive package for private power plants which will start their commercial operation between January 1, 2020 and December 31, 2024.
Under this package, the companies, except the coal-based power plants, will get the tax benefit for 10 years at diminishing rates — full exemption for the first five years and reduced rates for the next five years.
The companies will also have to obtain electronic taxpayers’ identification numbers, maintain
accounts properly and submit tax returns every year to get the benefit.
The conditions of obtaining e-TINs and filing tax returns are also applicable to all companies for enjoying income tax holiday or similar waiver.
BEZA officials said that the two SROs created confusion over the applicability of 15-years tax holiday benefit for power plants inside EZs as the issue was not made clear in the SROs.
They also said that the issue should be made clear for attracting investments in the EZs.
In the letter, the BEZA said that revenue board offered tax holiday at higher rate and for longer period to the private power generation companies established outside the EZs while the benefit was offered to the EZ companies at lower rate and for shorter tenure.
‘It would be appropriate to offer similar tax benefits to the EZ industries including power plants like the industries located outside EZs enjoy,’ the BEZA said in the letter sent on May 3 to NBR chairman Md Mosharraf Hossain Bhuiyan.
The BEZA is working to establish 100 EZs across the country by 2030. The zones will be set up through both public and private initiatives.
Some private economic zones have already started their operations while some others have made significant progress in terms of setting up.
Officials of the NBR said that high-ups of the revenue board would take a decision on the BEZA demand after examining the issue.
Source: New Age.