LARGE-SCALE INVESTMENT IN POWER SECTOR

NBR opposes energy ministry’s proposal for more tax benefits

Staff Correspondent | Published: 00:05, Oct 24,2017 | Updated: 23:40, Oct 23,2017

 
 

The National Board of Revenue has turned down the power, energy and mineral resources ministry’s proposal to offer tax benefits including duty-free import of high-speed diesel (HSD) for power plants for attracting large-scale investment in the power sector.
Officials said that the revenue board declined to accept the proposal as part of its move of coming out of the culture of tax exemption and raising tax-GDP ratio in the country.
In its opinion on a recent report on large investment in the power sector prepared by a committee of the ministry, the revenue board said that they had an instruction from finance minister Abul Maal Abdul Muhith to avoid tax exemption practice.
The ministry formed the committee to review the existing laws including Bank Company Act-1991 and other rules and regulations to see whether these laws would create any obstacle to attracting large-scale investment in the power sector.
The report sought exemption from paying customs duty, value-added tax and other applicable taxes on import of high-speed diesel for both public and private sector power plants.
It also wanted reprieve for the Bangladesh Power Development Board from paying 2.5 per cent customs duty on rental payment throughout the contract period.
It also proposed that steel plate, as a part of power plant equipment, might be exempted from customs duty, VAT and other taxes.
The report also suggested waiver of duty on import of spare parts for public sector power plants like the private sector power plants enjoy.
In its opinions, the customs wing of the NBR said import of HSD by the public and private power plants was not exempted from payment of duty.
It also said that the BPDB would have to pay 2.5 per cent customs duty at the customs house concerned on each rental bill payment.
In case of steel plate import, the revenue board said the item could not be exempted from customs duty as there is local production of the product and it is one of the key mandates of the tax policy to protect local industries.
Industries are encouraged to use local products, said the NBR.
On the proposal of duty-free import of spare parts, the revenue board said that both public and private sector power plants could import erection materials, machinery and spare parts without paying customs duty.
Customs officials that said the government had already offered many incentive packages for encouraging investment in power plants.
The finance minister earlier instructed the tax authorities to gradually phase out the existing tax waiver practice in the country so that tax-GDP ratio could be increased which is now slightly over 10 per cent and one of the lowest in the world.
The ministries having development projects will have to pay all types of taxes including customs duty and VAT on import of goods and services for the projects, according to the instruction of the finance minister.
If necessary, the lead ministry may seek required allocation from the finance ministry, it said.
Officials said that the revenue board had already given various tax benefits to public and private sector power plants.
So, it should not allow further exemption which undermines its efforts to raise tax-GDP ratio in the country, they said.

More about:

Want stories like this in your inbox?

Sign up to exclusive daily email

Advertisement

images

 

Advertisement

images