Govt grants 10-year tax exemption to renewable energy companies

The government has introduced significant tax incentives for renewable energy power generation companies. 

Businesses commencing commercial operations between 1 July 2025, and 30 June 2030, will get a 10-year tax exemption facility.

The National Board of Revenue (NBR) issued a notification yesterday announcing the decision.

According to the notification, renewable energy power plants starting operations between 1 July 2025, and 30 June 2030, will enjoy a 10-year tax holiday followed by a 3-year period of 50% tax exemption and a 2-year period of 25% tax exemption. 

The new policy will take effect from 1 July 2025. 

To avail these benefits, renewable energy power producers must obtain approval from the Power Division for each project or power plant. 

Earlier, the decision was finalised during an inter-ministerial meeting at the Secretariat on 14 November.

The interim government has taken steps to re-evaluate renewable projects since it assumed power on 8 August shortly after the fall of Sheikh Hasina's administration. 

Last month, letters of intent for 31 renewable power projects, totalling 2,678 megawatts, were cancelled. Solar power producers say these projects could have replaced $820 million in fossil fuel imports and created 10,000 direct jobs.

On 29 October, the NBR issued a circular announcing that renewable energy companies will get a five-year 100% tax exemption. The extension of the exemption to 10 years comes just 15 days later.

Currently, the country's renewables are 603MW from solar, 50MW from wind, and 230MW from hydropower.

According to the NBR, several sectors are currently benefiting from tax holidays. These include leather and leather products, automobiles, agricultural machinery, automatic bricks, bicycles, furniture, LED TVs, home appliances (like refrigerators), toys, mobile phones, pharmaceuticals, tyres, and textile machinery.

Tax holidays are also granted for the construction of some major infrastructure projects.