The National Board of Revenue has offered value-added tax exemption on import and local production of solar modules or panels to make the product affordable and encourage use of renewable energy.
VAT wing of NBR on August 8 issued a statutory regulatory order exempting the product from 15 per cent VAT, which became effective on the day.
NBR withdrew the tax as per demand of stakeholders both from public and private sectors just after around two and half months of imposition of VAT on the equipment of solar system.
The revenue board in the budget for the current FY 2018-2019 imposed 15 per cent VAT and raised advance trade VAT to 5 per cent from previous 4 per cent on import and production of solar modules or panels, in addition to existing 5 per cent advance income tax.
ATV and AIT, however, will remain in place, officials said.
Import and production of photovoltaic cells, the basic element of solar panels, however, enjoy VAT and ATV exemption and pay only 5 per cent AIT.
Since the imposition of the tax, stakeholders including in power division, energy and mineral resources ministry, Sustainable and Renewable Energy Development Authority of the division, Bangladesh Solar and Renewable Energy Association and state-owned Infrastructure Development Company Ltd have been requesting NBR for withdrawal of the VAT.
The organisations claimed that imposition of VAT would increase the cost of production and set up of solar panel in the country making solar energy costlier.
It would also discourage people from adopting solar home systems, they said, adding that it would also hamper the government’s initiative to increase production and use of green and renewable energy.
The government has set a target of producing 2,000 megawatts of power through renewable energy from the source
which is 10 per cent of the total required power by 2020.
Public and private agencies are implementing various plans and initiatives to meet the government’s goal of producing renewable energy.
Currently, around 12 per cent of the total population is getting electricity from 52 lakh solar home systems across the country.
The government is also implementing a set of projects, including solar irrigation, solar mini grid, solar rooftop project and large solar park, to increase production of electricity from the source.
Nine hundred and ninety-nine solar irrigation pumps, 15 mini-grids and 25 megawatts solar rooftop have already been established.
Officials said that NBR waived the product from VAT payment considering the importance of renewable energy and to increase the use of renewable energy through making the source affordable.