2 foreign operators of Laldia, Pangaon terminals to get 10-year full tax exemption: NBR chief
The two foreign companies contracted to develop and operate the Laldia Container Terminal and run the Pangaon Container Terminal will receive a 100% tax exemption for 10 years, said National Board of Revenue (NBR) Chairman Abdur Rahman Khan.
They will enjoy the decade-long tax benefit under a 2017 government order. The NBR chief's statement follows the government's signing of separate deals with Danish firm AP Moller and Swiss firm MEDLOG for the two terminals.
"We signed two agreements for the Laldia and Pangaon terminals. Under these deals, we had to grant the companies a 100% tax exemption for 10 years. Additionally, the foreign technical personnel working there will also receive certain tax exemptions," he said at a programme at a hotel in Gulshan, Dhaka, today (19 November).
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"In addition, their (companies') royalty, technical know-how fees, dividends – everything will now receive tax exemption," Abdur Rahman said.
The discussion, titled "Taxation to Realise 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.
The NBR chief, however, cautioned that widespread tax breaks could strain direct tax collection. Referring to existing government tax incentives, he said, "Economic zones, Export Processing Zones, hi-tech parks – everywhere. Even our Hi-Tech Park Authority can declare any organisation eligible for tax breaks. If I set up an industry in front of my home, they (various 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?"
The Public Private Partnership (PPP) Authority is among the key agencies involved in the Laldia and Pangaon deals. 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 a 50% tax exemption on their income for the first three years.
When contacted about the tax breaks extended to the Laldia and Pangaon foreign investors, the NBR chairman told TBS that the government is not offering any new or additional benefits to the two companies. "The benefits are being provided under the previous orders," he said.
Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), told TBS, "We cannot completely withdraw tax exemptions. However, the exemptions must comply with the guidelines of the World Trade Organization (WTO)."
'These deals must ensure transparency'
The agreements with the two foreign companies have sparked debate, amid criticism over the undisclosed terms 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 a public debate on these issues."
Regarding the disclosure of agreement details, Ashik Chowdhury, executive chairman of the Bangladesh Investment Development Authority (BIDA) and CEO of PPP Authority, 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."
Who are the Laldia and Pangain investors?
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 Tk250 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.
