Investors in Laldia, Pangaon to receive 100% tax exemption for 10 years: NBR chairman
Two foreign companies operating the Laldia Container Terminal and the Pangaon Container Terminal will receive 100% tax exemption for 10 years, National Board of Revenue (NBR) Chairman Abdur Rahman Khan said today (19 November).
"The day before yesterday, we signed two agreements for Laldia port and Pangaon port. In these agreements, we had to allow 100% tax exemption for 10 years for those companies. Not only that, the technical people [foreigners] who will work there will also enjoy tax exemption," he said at a programme held at a hotel in Gulshan, Dhaka.
He added, "In addition, their [companies] royalty, technical know-how fees, dividends – everything will now receive tax exemption."
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However, this benefit is under the previous order of the government.
The discussion event, titled "Taxation to Realize Economic, Social, and Cultural Rights in Bangladesh," was organised by the Office of the United Nations High Commissioner for Human Rights (OHCHR) Mission in Bangladesh. The discussion emphasised increasing direct taxes.
Referring to existing government tax incentives, Abdur Rahman said, "Economic zones, Export Processing Zones [EPZ], hi-tech parks – everywhere. Even our Hi-Tech Park Authority can declare any organisation eligible. If I set up an industry in front of my home, they [authorities] could declare it a hi-tech park and get tax exemptions."
"So how can we collect direct taxes, if we allow this kind of indiscriminate tax exemption to the people who are supposed to pay tax?" he asked.
According to an existing 2017 government order (SRO) on taxation, companies investing in 12 types of infrastructure projects under PPP are entitled to 100% income tax exemption for 10 years.
These projects include national highways or expressways and related service roads; flyovers; elevated and at-grade expressways; river bridges; tunnels; river ports; sea ports; airports; subways; monorails; railways; bus terminals; bus depots; and elderly care homes.
A separate order states that foreign technicians working in these sectors will receive 50% tax exemption on their income for the first three years.
When contacted, the NBR chairman told The Business Standard that the government is not offering any new or additional benefits to the two companies.
"The benefits are being provided under the previous order," he said.
The interim government signed two agreements on 17 November, handing over two key container terminals – Laldia in Chattogram and Pangaon near Dhaka – to foreign operators, marking the first long-term lease of major port infrastructure to overseas companies in Bangladesh's history.
Netherlands-based APM Terminals BV, part of Danish shipping giant AP Moller-Maersk, has signed a 30-year concession agreement with the Chittagong Port Authority (CPA) to develop and operate the Laldia Container Terminal, a major public–private partnership (PPP) project.
PPPA CEO Ashik said the company will invest an initial $550 million (around Tk6,700 crore) over the next three years for construction, equipment and related works. As part of the signing, APM Terminals will pay Tk 250 crore.
Switzerland-based MEDLOG, a global leader in inland logistics, will manage and operate the Pangaon Inland Container Terminal (PICT) near Dhaka for 22 years. The company won the contract through an open bidding process involving three candidates.
Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), told TBS, "We cannot completely withdraw from tax exemptions. However, the exemptions must comply with the guidelines of the World Trade Organization [WTO]."
A debate has been ongoing for several days about the agreements with the two foreign companies, with criticism emerging over the lack of disclosure regarding the contents of the contracts.
Mustafizur Rahman said, "There must be transparency and accountability regarding what we are gaining from these agreements and what concessions we are giving. There should also be public debate on these issues."
Ashik Chowdhury, executive chairman of the Bangladesh Investment Development Authority (Bida) and CEO of PPPA, wrote in a Facebook post, "Not only Bangladesh, but no government anywhere publishes the main PPP contract documents publicly due to legal restrictions. Full disclosure is not safe under government procurement policy and PPP guidelines because it may affect future bidding processes."
"If we disclose everything, we will be at a disadvantage in negotiations for all upcoming contracts. Moreover, PPP agreements contain business information and operational strategies protected by confidentiality clauses. Institutions like the World Bank and ADB also advise publishing summaries rather than full agreements," he added.
