In a significant development, the National Board of Revenue (NBR) has recently made changes to the tax-calculation method and reduced the deed value of land and apartments, resulting in a reduction in registration costs. This move comes in response to demands from various stakeholders. Additionally, the NBR has extended tax exemptions for private coal-fired power plants and foreign workers in the Dhaka Elevated Expressway (DEE) project.
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The NBR has amended the existing Statutory Regulatory Order (SRO) for land and apartment registration. Instead of area-based rates, the new method incorporates Mouza-based rates, aligning with the land registration office records. The tax rate remains unchanged at 8.0 percent of land prices.
However, the tax on the deed value of land has been lowered, benefiting property buyers.
The NBR’s decision to revise the tax-calculation method and reduce the deed value of land and apartments is a significant step towards making property ownership more affordable
Why this Tax Exemptions?
The increase in the land registration tax rate, as highlighted by various stakeholders to the authorities, led to the need for a tax overhaul. In June, the National Parliament approved a new income tax law that essentially doubled the source tax on land registration. This substantial tax hike understandably deterred property transactions, making this reform a welcome change for both buyers and sellers.
Reduced Tax for Specific Areas
Notably, the highest amount of tax on the deed value of land has been reduced by Tk 0.5 million for specific areas, including:
- Gulshan
- Banani
- Motijheel
- Dilkusha
- North-South Road
- Motijheel extended area and
- Mokhakhali
This reduction aims to make property ownership more accessible and affordable in these prime locations.
Extension of Tax Exemptions
Private coal-fired power plants that were unable to commence commercial operation by June 30, 2023, now have an extended deadline until June 30, 2024, to avail tax exemptions.
This extension provides relief to power plant producers facing delays in their projects.
Tax Exemptions for Foreign Workers
Foreign workers engaged in the Dhaka Elevated Expressway (DEE) project will enjoy tax exemptions.
Exemptions cover income derived from salary and allowances, starting from July 1, 2023, and lasting until June 2026.
This incentive aims to attract foreign expertise to contribute to the successful implementation of the DEE project.
Tax Exemptions for Power Generation Companies
Private coal-fired power generation companies that signed contracts with the government by June 30, 2020, and commenced commercial production by June 30, 2024, are entitled to tax exemptions on their business income.
This exemption extends for up to 15 years, starting from the date of commercial production.
It encourages investment in the power generation sector, promoting energy security.
Comprehensive Tax Exemptions
In addition to income tax exemptions, the tax waiver includes:
- Interest income from foreign loans
- Payable royalties
- Technical assistance
- Know-how and
- Capital gains resulting from the transfer of shares by the power generation company
These exemptions aim to facilitate a conducive environment for business operations in the power generation sector.
Companies benefiting from tax exemptions are required to preserve their accounts and adhere to the rules outlined in the Private Sector Power Generation Policy of Bangladesh-1996.
This ensures transparency and accountability in their operations.
Conclusion
The NBR’s decision to revise the tax-calculation method and reduce the deed value of land and apartments is a significant step towards making property ownership more affordable. Additionally, the extension of tax exemptions for private coal-fired power plants and foreign workers in the DEE project demonstrates the government’s commitment to encouraging investment and promoting economic growth. These changes are expected to have a positive impact on the real estate and energy sectors in Bangladesh, creating opportunities for both domestic and foreign investors.
