The National Board of Revenue (NBR) has announced a five-year extension of the tax exemption period for renewable energy-based power plants in a pivotal decision aimed at enhancing the appeal of the renewable energy sector. This initiative is intended to attract prospective investors and facilitate the advancement of sustainable energy solutions within the country.
On June 26, 2023, the government led by Sheikh Hasina restructured the existing tax benefits, withdrawing the comprehensive tax exemption previously offered and instituting a new framework that allows for a ten-year tax exemption for investments made by June 2025.
In a statutory regulatory order (SRO) issued on October 29, the NBR specified that investors initiating commercial production between July 2025 and June 2030 will qualify for significant tax incentives. These incentives include a full 100% income tax exemption for the initial five years of operation, followed by a 50% exemption for the subsequent three years, and a 25% exemption for the final two years.
This extended tax incentive is indicative of the government’s commitment to cultivating a robust renewable energy sector, aligning with its strategic objectives to expand energy production capacity and promote environmental sustainability. Since its inception in 2011, the tax exemption program has been instrumental in attracting investments and fostering growth within the renewable energy domain.
As the global landscape increasingly prioritizes green energy initiatives, this strategic extension is expected to further stimulate investments, potentially positioning the nation as a regional leader in renewable energy production.
