NBR offers 10-year tax benefit for investments in renewables

The National Board of Revenue (NBR) yesterday granted a 10-year tax benefit for investments to establish renewable energy-based power facilities with the objective to facilitate generation of clean energy.

The tax administration said it would exempt all the taxes on incomes of investors if their plants start commercial production between July 1, next year and June 30, 2030.

Investors will get full tax exemption in the first five years of beginning of production, according to a notification by the NBR.

Half of their incomes will be taxed in the following three consecutive years. The tax rate on income from renewable energy projects will be 25 percent in the next two years, it added.

The NBR offered the tax benefit following a request from the Power Division to encourage private investment in clean energy ventures and cut dependence on fossil fuel-based electricity.

The tax benefit will be effective from 1 July, 2025, said the NBR in the notification.

A tax official said this is the first time the tax administration offered tax benefits exclusively for renewable energy projects.

Earlier, the NBR offered tax breaks for privately-run power plants, except for coal-fired ones. The tax authority in June 2023 extended a tax holiday by 12 years on the income of privately run power plants, except for coal-fired ones, that would start generation of electricity anytime before June 30, 2024.

On August 27, the interim government cancelled 42 power-plant projects, including 37 renewable facilities, with a combined capacity of around 3,102 megawatts.