Govt announces waiver to lure in investors
The National Board of Revenue has given a 15-year tax waiver for electricity generation through coal in a bid to encourage private investors to establish coal-based power plants.
Companies that will sign contracts with the government by June 30, 2020, to establish coal power plants will receive the tax break on income from electricity generation, the NBR said in a notice.
Companies that will begin producing electricity after June 30, 2023, will not get the facility, it added.
Foreigners working in those private coal power plants will also receive a three-year tax waiver from the day they arrive in Bangladesh.
Companies will not require paying taxes on interest payment on foreign loans.
Payment by companies as royalties, fees for technical know-how and technical assistance will also be eligible for the waiver, according to the notice.
The NBR also offered tax benefits for private power generation firms that produce electricity based on other types of fuels, except coal.
The revenue administration’s move coincides with the establishment of a 1,320 megawatt coal-fired power plant under a joint venture in Rampal, 14 kilometres from the Sundarbans.
Left-leaning organisations and green activists oppose setting up the coal power plant near the world’s largest mangrove forest, on grounds that the coal-power plant will threaten biodiversity.
The tax incentive comes as the government plans to gradually cut dependence on gas-based power generation by increasing electricity production from coal through the use of domestic deposits and imports.
Coal now accounts for 2 percent of total power generation capacity with the government aiming to raise the share to 24 percent by 2017.
By 2030, coal is projected to produce half of total electricity demand at 38,700 megawatts, according to the Power Sector Master Plan.
Presently, Bangladesh has a reserve of 2,797 million tonnes of coal in five coal mines in the north and northwest. Of the mines, electricity generation has begun at Boropukuria in Dinajpur.
Coal in the rest of the mines is yet to be extracted, in the absence of a coal policy and opposition from left organisations and environmentalists over the coal extraction method. Last year, a government-formed expert committee submitted a draft of the coal policy.
The tax incentives have been given in advance to encourage private investors to establish coal-fired power plants after finalisation of the coal policy, an NBR official said.
For using other fuels for electricity generation, companies will receive a 15-year tax break for starting production by December 31, 2014. Foreign employees of these firms will get a tax break for three years from the day they arrive in Bangladesh.
These companies will also not be required to pay taxes on the interest payment on foreign loans, royalties, fees on technical know-how and technical assistance.
Private companies will get five-year tax exemption if they start power generation after December 31, 2014.
Source: The Daily Star
