Power Division seeks tax exemption for solar sector investors

The Power Division has sought the reinstatement of tax exemption benefits for private investors in the renewable energy sector, particularly those investing in solar power projects.

According to official sources, the Power Division has formally urged the National Board of Revenue (NBR) to restore the tax exemptions for the power sector.

The government had withdrawn these exemptions in a gazette notification issued on 26 June 2023, saying that companies which achieve their commercial operation date (COD) between 1 January 2023 and 30 June 2024 would still qualify for the tax exemptions.

Under the terms of the new gazette, private power generation companies—excluding coal-fired plants—are eligible for various tax exemptions.

Officials said that only those companies capable of starting commercial operations before 2024 would benefit from these exemptions, particularly a 15-year exemption on the import of machinery and spare parts.

As outlined in the NBR notification, private power generation companies will enjoy a 100% income tax exemption until 30 June 2036, limited to income derived from power generation activities. Additionally, foreign personnel employed by these companies will be exempt from income tax for three years following their arrival in Bangladesh.

Further exemptions include a 100% income tax break for the first five years of operation starting from COD, a 50% exemption for the next three years, and a 25% exemption for the subsequent two years.

Sources report that the interim government, after taking office, suspended the Speedy Increase of Power and Energy Supply (Special Provision) Act 2010 and cancelled 34 solar power projects that had been approved under this law. These projects were originally selected without a tender process and on an unsolicited basis.

In place of this, the Power Division has opted to open a tender for the establishment of 10 solar power projects, with a total capacity of 500 MW—each project offering 50 MW. However, many potential investors have expressed reluctance to participate in the tender without the availability of tax exemption benefits.

As a result, the state-owned Bangladesh Power Development Board (BPDB) has been unable to issue the tender for the projects.

Following this, the Power Division requested the revival of the tax exemption benefits, sending a letter to the NBR.

Energy and Power Adviser Dr Muhammad Fouzul Kabir Khan commented on the situation, saying that discussions have already been held with the Finance Adviser.

"We are now waiting for the NBR's response in this regard… once we receive a positive response from the NBR, we will proceed with the tender for the solar power projects," he told UNB last week.