NBR to revoke tax exemption for 2 Summit Group subsidiaries
Summit Group says 92% of its power production capacity active now
The National Board of Revenue (NBR) has decided to revoke the source tax exemption on dividend transfers for two Singapore-based subsidiaries of Summit Group – Summit Power International and Summit Corporation.
The decision was made during a regulatory authority meeting last week, with NBR Chairman Abdur Rahman Khan expressing his concurrence. The revenue board is expected to issue an official notice on the revocation soon, its officials told TBS.
The group, which has enjoyed the exemption tacitly since January last year, will now have to pay source tax at 15% on dividend transfers, they said.
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According to NBR sources, the previous administration issued two separate clarifications exempting Summit Power International and Summit Corporation from source tax on dividend transfers. These exemptions were reportedly granted under directives from former NBR chairman Abu Hena Md Rahmatul Muneem.
TBS tried to communicate with Muneem but he did not respond to phone calls.
According to the officials, the board had granted tax exemptions to Summit Power International during dividend transfers from Summit Power to Summit Corporation, citing the Double Taxation Avoidance Agreement with Singapore. However, the NBR determined that Summit Group had not met the necessary conditions for the exemption, leading to the revocation.
After the formal cancellation of this facility, the relevant tax zone may start a fresh assessment to identify the amount of the tax that is payable to the government exchequer.
Under Section 117 of the Income Tax Law 2023, Summit Power will have to deduct 20% of source tax during the transfer of dividends to Summit Corporation and under Article 11, Para 2 of the Double Taxation Avoidance Agreement, the Summit Corporation will also have to deduct source tax at 15% during transfer of dividend to non-resident company Summit Power International.
The officials said the NBR has initiated reviews of all tax exemption decisions, following pressure from the International Monetary Fund.
Earlier this month, an IMF delegation revised the revenue collection target for NBR by an additional Tk12,000 crore.
92% of Summit's power capacity operational
Summit Group yesterday said 92% of its power production capacity is active now.
According to a company statement, of the group's 18 power plants having a total capacity of 2,225 MW, only five with 168 MW capacity are in shutdown mode due to gas shortage or no demand from the government or contract expiry.
Summit Power Limited, the publicly listed company owns 15 plants having a capacity of 976 MW. Of them, 10 are in operation with a total capacity of 808 MW.
