NBR removes tax ambiguity for commercial solar importers

Commercial importers of solar equipment will now be entitled to concessional tax treatment similar to that available to manufacturers, following a clarification issued by the National Board of Revenue (NBR).

The NBR on Monday issued an instruction to all field-level customs offices, simplifying the import procedure for solar power equipment under the tax waiver scheme to facilitate faster clearance of such goods at ports.

Although the government offered tax benefits in the current fiscal year’s budget to accelerate the adoption of renewable energy, businesses subsequently raised concerns over complexities in availing the concessions.

Customs officials at field offices were also reportedly uncertain about allowing the concessions because of ambiguities in the relevant provisions.

Against this backdrop, the NBR’s Customs Policy Wing – in its latest directive signed by Md Tareq Hasan, first secretary (Customs: Policy and IT) of the NBR – clarified the applicable customs duties, taxes, and Customs Procedure Codes (CPCs) for imports of solar power equipment.

Research Director of the Centre for Policy Dialogue Dr Khondaker Golam Moazzem says the directive would help address concerns among solar equipment importers over availing the benefits.

“It was a longstanding demand of commercial importers providing engineering, procurement, and construction (EPC) services to allow them to avail the same tax benefits,” he says.

“It is a significant step. Commercial importers will be able to avail the tax rebate if they are involved in manufacturing later,” he adds.

Even general importers, except for commercially registered importers or manufacturers, will also be able to avail the benefit, according to the clarification.

The directive aligns with the finance minister’s pledges in the budget as well as the government’s political assurances to facilitate the transition to renewable energy.

It clarifies the duty exemptions and applicable CPCs for solar photovoltaic modules, panels, inverters, and other related equipment.

The clarification came after the same HS code for solar photovoltaic modules and panels – 8541.43.00 – appeared in two separate notifications, creating confusion among importers and customs officials.

According to the directive, solar panels under HS code 8541.43.00 should be cleared under Notification No 191-Law/2025/13/Customs, while other relevant items should be cleared under Notification No 159-Law/2026/14/Customs, with the appropriate CPC mentioned in the Bill of Entry.

The NBR also addressed a clerical error concerning solar inverters in the 2026 notification.

Although the notification mentioned HS code 8504.40.40, the correct code is 8504.40.90.

The NBR said the product description – “Solar Inverter” – would prevail in determining eligibility for the duty exemption.

Therefore, the clerical error will not deprive eligible importers of the benefit.

For manufacturing companies importing capital machinery to establish solar power plants, the applicable customs duty will be 1.0 per cent, subject to fulfilment of the prescribed conditions.

Commercial importers, however, will have to pay 1.0 per cent customs duty, along with 7.5 per cent advance tax and 5.0 per cent advance income tax.

The advance tax and advance income tax will subsequently be adjustable in accordance with the applicable tax provisions.

Mostafa Al Mahmud, president of the Bangladesh Sustainable and Renewable Energy Association (BSREA), says the tax burden remains comparatively high because of the 15 per cent VAT, taking the total tax incidence to 17 per cent.

“We held a meeting at the NBR following the call from the Customs Wing,” he says.

The government could consider waiving VAT while retaining only 2.0 per cent advance income tax for commercial importers, he says.

“Solar equipment imports will see a significant rise if the government considers VAT exemption for the sake of rapid growth of solar energy,” he adds.

The directive was sent to customs houses in Dhaka, Chattogram, and Mongla, as well as the Ministry of Power, Energy and Mineral Resources, Bangladesh Investment Development Authority (BIDA), Sustainable and Renewable Energy Development Authority (SREDA), and relevant trade bodies, including BSREA.

The clarification is expected to reduce disputes and delays in the clearance of solar equipment by providing customs officials and importers with a uniform interpretation of the relevant notifications and duty provisions.

Source: The Business Standard