A statutory regulatory order (SRO) of the revenue board in this connection said the reduced vat rate would remain effective until June 30, 2025
The National Board of Revenue (NBR) on Wednesday slashed the value added tax (VAT) on coal import for power generation to 5% from the existing 15%.
A statutory regulatory order (SRO) of the revenue board in this connection said the reduced vat rate would remain effective until June 30, 2025.
The order, signed by the NBR Chairman Mosharraf Hossain Bhuiyan, said that to get the reduced vat rate at 5% the traders must submit a letter to customs declaring they would use the fuel only for power generation.
Importers, who import coal for other purposes, have to pay regular 15% VAT, the SRO elaborates.
The government cut the VAT at a time when three coal-based power plants in public sector and four in private sector were under construction and expected to go for production soon, said a senior NBR official.
A huge amount of coal would be required for the power plants, he added, saying that the VAT reduction would minimize electricity production costs, as the coal accounts for about 65% of the total cost.
Currently, there are no other duties on coal import.
The NBR earlier provided duty benefits on importing oil and liquefied natural gas for electricity generation.