Foreign operators, personnel getting 10-year tax holiday

Two foreign operating companies investing in Bangladesh's Laldia and Pangaon container terminals to handle seaborne cargoes are receiving 10-year tax holiday, the revenue authority unveils government decision on just-signed deals.

Also, foreign technical personnel working in these terminals will also come under the purview of this cent-percent tax waiver, National Board of Revenue (NBR) Chairman Abdur Rahman Khan said Wednesday.

"In addition, their royalty, technical know-how fees, dividends-everything will now receive tax exemption," says the revenue chief.

He notes that these benefits will be provided under an earlier government order-ostensibly meant for baiting foreign investment into the country.

Mr Khan made the remarks while addressing a discussion titled 'Taxation to Realize Economic, Social and Cultural Rights in Bangladesh' as the chief guest in a Dhaka hotel-two days after the interim government contracted out the two port facilities.

The Office of the United Nations High Commissioner for Human Rights (OHCHR) Mission in Bangladesh organised the event.

The NBR chairman, however, strikes a note of caution that indiscriminate exemptions make it difficult to raise direct tax revenue.

"Unless we address exemptions, expand the tax net, and improve enforcement, we cannot create the fiscal space needed to invest in education, health, and social protection for all citizens," he told the UN-sponsored meet.

Referring to existing government tax incentives, he adds: "Economic zones, export-processing zones (EPZs), hi-tech parks-everywhere. Even our Hi-Tech Park Authority can declare any organisation eligible. If I set up an industry in front of my home, they 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 exemption for people who are supposed to pay tax?"

According to a 2017 statutory regulatory order (SRO) on taxation, companies investing in 12 types of infrastructure projects under public-private partnership (PPP) arrangements are entitled to 100-percent 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, seaports, 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-percent tax exemption on their income for the first three years.

On November 17, the post-uprising government signed two agreements leasing out the Laldia and Pangaon container terminals to foreign operators-marking the first long-term lease of major port infrastructures to overseas companies in Bangladesh's history.

Netherlands-based APM Terminals BV, part of Danish shipping giant AP Moller-Maersk, inked a 30-year concession agreement with the Chittagong Port Authority (CPA) to develop and operate the Laldia Container Terminal, a major PPP project.

The PPPA CEO, Ashik Chowdhury, said the company will invest an initial USD 550 million (around Tk 6,700 crore) over the next three years for construction, equipment and related works. As part of the signing, APM Terminals will pay Tk 250 crore as signing money.

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.

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