The tax holiday scheme for independent power producers – which was scheduled to end in June 2016 – is set to be extended till December 2018 under a second phase, in a bid to create investment-friendly atmosphere for installing privately-owned power plants and ensuring economic progress.
The government has taken the initiative in an attempt to implement power projects, according to the meeting minutes between Prime Minister Sheikh Hasina – also the minister-in-charge of the Power Ministry – and Power Division officials on February 6.
“We have decided to extend the tax holiday facility to independent power producers for implementing their projects. The Power Division will place a proposal to the National Board of Revenue (NBR) in this regard,” State Minister for Power, Energy and Mineral Resources Nasrul Hamid told the Dhaka Tribune recently.
As per an NBR Statuary Regulatory Order (SRO), issued on November 18, 2013, the private power generation company which would be able to meet the commercial operation date (COD) within June 2016 would get a total tax waiver for up to 15 years.
According to another SRO issued on the same date, the private power generation company which would be able to meet the COD after July 1, 2016, would get tax waiver on conditions that would see the waiver reducing gradually after five years.
Earlier, the government planned to introduce a 15-year tax holiday for privately-owned non-coal-based power plants after they start their commercial production. The scheme would also allow the foreign employees of private power plants a tax holiday for the first three years. They will also be relieved from paying taxes on the interest of foreign loans.
In addition, the government also relaxed taxes on royalties, technical know-how and the technical assistance fees.
The government is planning to install 71 additional power plants capable of producing 10,970MW of electricity under the private and public sectors by 2018.
On the other hand, Bangladesh-India Friendship Power Company Limited (BIFPCL) recently sought nine fiscal benefits from the Power Division, demanding that a special SRO from the division allows them waiver from custom duties, VAT and other local taxes and duties for the company and its contractors.
The BIFPCL, a joint venture of Bangladesh Power Development Board (BPDB) and National Thermal Power Company (NTPC) Ltd of India, will build a 1320MW coal-based power plant project at Rampal in Bagerhat. These fiscal benefits were included in the project as per an implementation agreement signed on April 20, 2013.
