The National Board of Revenue (NBR) has reduced the value added tax (VAT) on coal imports for power plants to 5 percent from the existing 15 percent.
An NBR statutory regulatory order (SRO) on Wednesday (Dec 4) said the reduced vat rate would remain effective until Jun 30, 2025.
It said importers must submit a declaration to the customs that the coal brought in will be only used for power plants to avail the reduced VAT rate.
Importers, who import coal for other purposes, have to pay the regular 15 percent VAT, said the NBR order.
The government slashes VAT at a time, when three state-owned coal-fired plants and four other private ones are being constructed and expected to go to production soon, a senior NBR official told Dhaka-based English daily.
A huge amount of coal would be required for the power plants, he added, saying that the VAT reduction would minimise power production costs, as the coal accounts for about 65 percent of the cost.
The NBR earlier had provided duty benefits on importing oil and liquefied natural gas (LNG) for electricity generation.