Tax waiver on the interest component of foreign loans has been extended in debt servicing by businesses to cushion investors amid the current economic uncertainties, revenue officials said Wednesday.
Now the exemption of tax on the interest amount of foreign-loan repayments will be valid until December 31, 2024, the National Board of Revenue (NBR) decides in principle.
The NBR had earlier issued a Statutory Regulatory Order (SRO) waiving the tax until February 28, 2024. Foreign investors found it of no effect and sought an open-ended tax waiver as their contracts are usually inked for a longer period.
A senior official of the NBR said the tax authority would issue an SRO soon by extending the waiver tenure considering the current economic turmoil following dollar crisis and devaluation of the local currency.
He felt that cost of business operations would go up if the tax remains in place in this situation.
"We have waived the taxes for a longer period so that investors can take preparation and sign deal in accordance with the tax policies," he said.
In the budget for the current fiscal year, the tax authority has, for the first time, imposed 20-percent tax at source on the interest amount of the loans taken from external sources.
The tax waiver would not be applicable to the amount of advance payment of interest on foreign credits.
Also, it would not apply to government loans taken from the development partners, including the International Monetary Fund (IMF), the World Bank (WB) and so.
The NBR has imposed some conditions in the SRO for availing the tax waiver, including submitting application in a prescribed format of the tax authority by loan takers with an undertaking.
Name and Taxpayer Identification number of the individual or company paying back loan, recipient details in other countries, how the loan has been utilized and volume of repayment have to be furnished in the form.
Bangladesh's aggregate foreign debts under government and private sectors had accumulated to US$96.26 billion until December 2022.
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