We are delighted to share some news on tax exemptions for private power generation companies.
On 26th June 2023, the Government of Bangladesh issued a gazette, extending the deadline for availing certain income tax exemptions. Per the previous gazette, the deadline for achieving a commercial operation date (“COD”) and availing these tax exemptions was set at 31st December 2022 or earlier. According to the new gazette, private power generation companies apart from coal-fired plants are eligible for a range of tax exemptions.
The available exemptions are as described below.
For Companies achieving a COD between 01st January 2023 and 30th June 2024::
- 100% Income Tax Exemption: Companies will enjoy a 100% income tax exemption until 30th June 2036 only on income derived from power generation activities.
- Exemption for Foreign Personnel: Foreign personnel employed in the Companies will be exempt from income tax for three years, starting from their date of arrival in Bangladesh.
- Withholding Tax Exemptions: Companies will benefit from withholding tax exemptions on interest payments for loans obtained from abroad, as well as on payments for royalties, technical know-how, and technical assistance fees.
- Capital Gains Tax Exemptions: There will be exemptions from capital gains tax for the investors on the transfer of their shares in such Companies.
For Companies achieving COD after 30th June 2024 but before 30th June 2025, tax exemptions on income from power generation will be granted as follows:
- 100% exemption for the first five years of operation, starting from COD.
- 50% exemption for the next three years.
- 25% exemption for the subsequent two years.
If you have any queries regarding these tax exemptions, please do not hesitate to contact us.