The government has offered a set of income tax benefits including tax holiday for 10 years to companies under the public-private partnership programme for implementation of infrastructure projects in 14 categories.
The National Board of Revenue on June 21 issued three separate statutory regulatory orders announcing the tax breaks for PPP projects.
According to an SRO, PPP companies will enjoy full waiver from paying tax on income derived from PPP projects for 10 years from the date of commencement of commercial operation of the projects in 14 specific sectors.
Capital gain derived from transfer of share capital of the companies, royalty, technical know-how and technical assistance fee and foreign technician will also get tax exemption, according to the other two SROs.
The tax exemption will come into effect from July 1 this year.
The projects include national highways or expressways and related service roads, flyovers, elevated and at-grade expressways, river bridges, tunnels, river port, sea port, airport, subway, monorail, railway, bus terminals, bus depots and elderly care home.
Officials of the revenue board said that the companies would enjoy tax exemption on capital gain derived from transfer of share capital raised for operation of any PPP project in the first 10 years of commercial operation.
Royalty, technical know-how and technical assistance fee to be paid by the companies for operation of the PPP projects will also be tax-free for 10 years from the date of commencement of commercial operation of the companies.
For availing the benefits, the companies will have to obtain 12-digit electronic taxpayers identification number and maintain their accounts properly, the SROs signed by NBR chairman Md Nojibur Rahman said.
The company will also have to submit income tax returns regularly for availing the benefits, the SROs said.
Foreign technicians in the projects will enjoy income tax exemption at the rate of 50 per cent of total applicable tax for three years of their appointment.
The benefit for foreign technicians, however, will not be given after five years of the beginning of commercial operation of the companies, according to an SRO.
Foreign technicians will have to obtain 12-digit electronic taxpayers identification number and have to submit tax returns for availing the benefit, it stated.
Officials of the revenue board said that the government took the decision to provide tax benefits to PPP companies to encourage private investment in mega infrastructure projects.
The PPP programme has not been experiencing significant progress in absence of fiscal incentives.
The PPP Office under the Prime Minister’s Office has long been advocating the benefits to make PPP scheme popular among the investors.
Since 2015, the revenue board for several times has expressed its reservation about giving tax exemption to the projects for the sake of revenue collection.
Later, the government high-ups took the decision of offering the benefit to expedite implementation of PPP projects.
Currently, a total of 45 PPP projects have been taken under the PPP scheme. Of which, two projects, both are hemodialysis centres, have started their operation at Chittagong Medical College Hospital and at National Institute of Kidney Diseases and Urology in Dhaka.
Dhaka Elevated Expressway and Kaliakoir Hi-Tech Park have remained at construction stage and the remaining projects are at different stages of award giving, procurement, development and feasibility study.
Of the projects, 16 belong to transport infrastructure, including Dhaka Elevated Expressway, Dhaka-Ashulia Elevated Expressway, second Padma Multipurpose Bridge at Paturia-Goalundo, dual-gauge double line Bangabandhu bridge, Dhaka-Chittagong Access Controlled Highway and construction of Laldia Bulk Terminal.
Other projects belong to education, health, power, tourism and services sectors.
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