Two statutory regulatory orders (SROs) of the National Board of Revenue (NBR) regarding tax exemption have created confusion among the investors of the private plants in economic zones (EZs), officials said.
Through one SRO, NBR offered 10 years' tax exemption at reduced rate on income of EZ investors while another offered 15 years full tax exemption or tax holiday facility to private power generation companies' income which will start commercial production within December 31, 2019.
"Those two orders created confusion over the applicability of 15 years tax-exemption facility on the private power generation companies investing inside EZs as it is not mentioned in the incentive package of the investors in EZs," said a senior official of the Bangladesh Economic Zones Authority (BEZA).
As per incentive package of the NBR, offered in 2015, investors of the EZs are exempted from payment of income tax for 10 years on their earnings from all types of business.
However, in another SRO issued in 2013, the revenue board offered 100 per cent tax-exemption facility for 15 years for private power generation companies' earnings conditionally.
Investors said they are not clear whether the 15 years tax exemption facility would be applicable for the companies inside EZs, the official said.
BEZA recently requested the NBR to clarify whether 15 years tax-exemption facility will be applicable for private power generation companies inside EZs.
In the letter, signed by executive member of BEZA Md Ayub, the authority said the 15 years tax exemption facility should be applicable for companies inside EZs in lockstep with companies located outside EZs.
Under the incentive package for BEZA offered by the income tax wing in 2015, companies will enjoy 100 per cent tax exemption on their business income for first three years.
For fourth year, they will enjoy 80 per cent tax exemption followed by 70 per cent for fifth year, 60 per cent for sixth year, 50 per cent for seventh year, 40 per cent for eighth year, 30 per cent for ninth year and 20 per cent for tenth year.
However, the companies will have to obtain taxpayers identification number (TIN) and submit tax returns along with maintaining the proper accounts to enjoy the reduced tax exemption facility.
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