National Board of Revenue has decided to prepare a list of items eligible for tax exemption on import by power plants to prevent misuse of existing benefits.
The tax authorities has also decided that power generation companies would not get tax waiver on import of construction materials, vehicles and consumable items, including pre-fabricated building, MS rod, dredger and distribution types transformer, which were not directly involved with power generation.
The decisions came at a meeting held NBR headquarters on July 7 with its chairman Md Mosharraf Hossain Bhuiyan in the chair.
Officials said that the revenue board took the decision following misuse of the existing tax scheme given at import stage to power generation companies.
Under the existing tax benefits given through a statutory regulatory order issued in 1997, power production companies enjoy exemption from payment of customs duty, value-added tax and supplementary duty on permanent import of power plants and equipment, and temporary import of erection materials, machinery and spare parts.
The SRO did not include the list of items eligible for exemption.
It, however, said that no exemption would be applicable on import of items, including office stationary, air conditioner, refrigerator, vehicles and household items, which were not involved with power generation or required for the purpose.
The companies would have to submit an approval certificate from power ministry to get the benefits.
The NBR in 2017 and in 2019 through two separate letters clarified on which items the benefits would be applicable and customs valuation process for the products.
But in recent times some companies were importing many items including pre-fabricated building, boulder stone, MS rod, hot rolled steel plate, steel structure, steel pipe, anchor boat, dredger, paints, cables, transformer oil, lube blending oil and other consumable items under the duty benefits with certificates from Power Division, customs officials said.
In absence of the list of eligible products create ambiguity over applicability of the benefits for the products and complexity over release of the items, they said.
Commissioners from customs houses including Chattogram, Benapole, Mongla and Paira also requested the revenue board for issuing a fresh SRO invalidating the previous SRO and clarifications considering the sensitivity of the sector, they added.
The list should be finalised after taking opinion from field-level customs officials, Power Division and entrepreneurs from the power sector, they added.
Customs officials apprehend that importers might try to import some items for commercial purpose in disguise of requirement for power sector by hiding information as was seen in import of dredger, anchor boat, stone, MS rod and steel sheet.
Local industry would also be affected due to the duty-free import of products which were produced locally, they said.
Officials said that tax benefits should be continued for power sector but should also prevent revenue loss due to weakness in implementation of the benefits.
At the meeting with NBR, a representative of Power Division claimed that it had been issuing approval certificates only for products required for power plants.
It has not been issuing the certificates for non-eligible products such as pre-fabricated building, stone, rod, anchor boat and consumables, he said.
He also agreed on issuing a fresh and single SRO for the sector.
The meeting decided that customs commissioners would ensure duty benefits only for those products with specific specifications directly involved in power generation and required for the purpose.
NBR would also form a committee to review the existing SRO and clarifications and finalise the list of products eligible for the benefits, it decided.
NBR member (customs policy and IT) would be convener of the committee comprising of commissioners of customs house Dhaka, Chattogram, Mongla, Benapole, Inland Container Depot Kamalapur, Pangaon and Paira, NBR first secretaries of customs policy, and customs exemption and project facilities, representatives from public and private power generation companies and the Federation of Bangladesh Chambers of Commerce and Industry.
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