Failed coal-based power plants get conditional tax exemption
Staff Reporter :
The National Board of Revenue (NBR) has extended the tenure of tax exemption facility for the country’s coal-based power plants till June 30, 2024 with conditions to facilitate the power producers.
As per the previous Statutory Regulatory Order (SRO), the special tax exemption was canceled for six domestic and foreign-owned coal-based power plants as they failed to start production by June 30 this year.
But, the NBR has been forced to provide the tax benefit due to the unequal agreement by the government with the power producers.
According to the new SRO, the power plants will get a 15-year tax exemption (from the date of commercial production) on income if they are contracted with the government for setting up plant by June 30, 2020 and start commercial production by June 30, 2024.
Besides, the income of foreigners working in power plants will get tax exemption for three years from the date of arrival as well as the plants will get tax exemption on foreign loan interest, royalty, various fees and capital gains on transfer of shares.
The NBR, however, included two conditions to the new SRO.
The conditions are along with maintaining proper account, all the provisions of the law must be followed and all the conditions stipulated in the Private Sector Power Generation Policy of Bangladesh 1996 must be fulfilled and the company must be managed according to the system described in that policy.
The owners of the power plants have requested the NBR for time extension after the expiry of the tax exemption period. The Bangladesh Power Development Board (PDB) had also written to the NBR for maintaining the tax benefits till June 30, 2024.
In the letter, the PDB recommended for the extension by mentioning the need for tax exemption, project financing and foreign exchange supply, project cash flow and foreign investment, employment and government revenue, reasons for not being able to start production, the government’s liability for non-exemption and the impact of non-exemption.
The six plants, failed to start production on scheduled time, are 1,320 MW power project of Bangladesh-India Friendship Power Development Company Limited (BIFPCL) at Rampal in Bagerhat, 1,224 MW SS Power Plant at Banshkhali in Chittagong, 1,320 MW project of Coal Power Generation Company Bangladesh Limited (CPGCBL) at Matarbari in Cox’s Bazar, 1,320 MW Rural Power Company Limited (RPCL)-Norinco International Power Limited (RNPL) at Patuakhali, 1,320 MW Rural Power Company Limited (RPCL) and Norinco International of China at Payra in Patuakhali and Orion Group’s 635 MW project at Matarbari.
