A generous pack of tax incentives for the investors in public-private partnership (PPP) projects is under consideration of the revenue authority to facilitate execution of big infrastructure projects.
Officials said the proposed incentives would be in the form of exemptions in the case of both income tax and Value Added Tax (VAT).
They said the PPP Authority under the Prime Ministers' Office (PMO) recently sought waiver of income tax and VAT for investors in PPP projects.
Syed Afsor H Uddin, Chief Executive Officer of the PPP Authority, recently sent two separate letters to the National Board of Revenue (NBR) Chairman with recommendations for tax exemptions.
In the letters, the PPP authority sought tax exemption on all incomes from business activities under the PPP projects related to important infrastructures.
It sought tax breaks for a period of 10 years from commencement of commercial operations of the projects related to infrastructure sector (excluding hospitality and tourism sectors).
The authority also requested tax exemption for a period of seven years from commencement of commercial operations of the projects related to hospitality and tourism-infrastructure sectors.
"Full tax exemption on all incomes from infrastructure-related PPP projects targeted for the benefit of rural and/or underprivileged population for a period of 12 years from commencement of commercial operations should be considered," the PPP authority advised.
It requested the NBR to offer full waiver of capital-gains tax arising out of transfer of shares in PPP companies during a period of 10 years from commencement of commercial operations.
The PPP Authority also sought 50 per cent exemption of income tax for the first three years for foreign personnel appointed in any PPP entity.
"Full tax exemption on royalties, technical know-how and technical-assistance fees payable for PPP projects during a period of 10 years from commencement of commercial operations should also be considered," said the wish list on fiscal incentives.
The PPP office sought tax exemption on the interest received on zero-coupon bonds issued for PPP projects by the financial institutions.
"VAT on user charges payable for the use of the PPP infrastructure shall be exempted," the letter reads.
VAT imposable on importable raw materials, plants, machinery, equipment and spare parts for the PPP projects should be waived, it said.
All import duties, supplementary duties and VAT imposable on re-exportable plants, machinery, equipment and spare parts (excluding passenger vehicles) shall be exempted, the letter says in definitive terms.
Officials said the NBR held a meeting on January 06, 2016 with the PPP Authority to discuss the incentive package.
The Authority requested the NBR to issue Statutory Regulatory Order (SRO), both in Bengali and English, offering the package incentives for promoting the newly conceived development recipe.
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