Bangladesh offers a 10-year tax exemption for renewables

Bangladesh’s government has introduced a 10-year tax exemption package for renewable energy projects, including solar arrays, effective July 1, 2025. The National Board of Revenue (NBR) has granted a 100% tax exemption for the first five years, a 50% exemption for the next three years, and a 25% exemption for the following two years. These new tax breaks will apply to power plants that commence commercial operation between July 1, 2025, and June 30, 2030.

“Power plants constructed under the build-own-operate (BOO) method under the Private Sector Power Generation Policy of Bangladesh will benefit from the tax holiday,” NBR Chairman Abdur Rahman Khan wrote in the notification. “They must adhere to the power generation policy’s conditions and operate by its guidelines.”

In June 2023, the previous government withdrew full tax exemptions for the renewable energy sector, causing investor concerns. Subsequently, both local and foreign investors have repeatedly requested the reinstatement of the tax exemption.

M A Taher, an executive member of the Bangladesh Solar and Renewable Energy Association (BSREA), believes that the new tax package will significantly benefit utility-scale power plants and attract new investment in the sector.

“The tax exemption will assist independent power producers in reducing production costs, leading to a decrease in power tariffs,” he said.

However, Taher has urged the government to extend tax exemptions to rooftop solar, irrigation pump, and floating solar segments, as these projects currently face a high tax burden.

Bangladesh currently has a total clean electricity generation capacity of 1.38 GW, of which 1.08 GW is generated from solar power.