Depreciation allowance, paid-up capital for infrastructure dev cos doubled

Express (August 07, 2011)

The National Board of Revenue (NBR) has doubled the depreciation allowance and amount of paid-up capital for physical infrastructure development companies in a bid to facilitate construction of country's road and communications network.

Foreign and local companies that will earn profit from bridges, flyovers, elevated expressways and other such physical infrastructure will enjoy 2.0 per cent depreciation allowance at the time of assessment of their income, instead of 1.0 per cent, said an order of NBR.

The facilities came into effect from the current fiscal to encourage companies undertake infrastructure development.

However, the NBR has raised the paid-up capital of the physical infrastructure development companies to Tk 2.0 million from Tk 1.0 million.

"We have found the poor physical infrastructure as a major reason of economic slowdown. The government has also offered tax holiday facilities for 17 categories of infrastructures," said a senior tax official.

Infrastructure development companies can enjoy the tax holiday facilities for ten years if they can start construction of the infrastructure within July 2011 to June 2013 period, the official said.

Such companies can enjoy full tax holiday for the first five years while reduced rate of tax will be imposed for the next five years in phases, he added.

Deep sea port, elevated expressway, export processing zone, flyover, gas pipeline, hi-tech park, Information and communication technology (ICT) village, IT park, water treatment plant, liquefied natural gas terminal and transmission line, mono-rail, rapid transit, renewable energy, sea or river port, toll road, underground rail and waste treatment plant can enjoy the facilities.

The country needs huge investment for physical infrastructure development to get benefit from transit that has been offered for neighbouring countries, India, Nepal and Bhutan, the official said.

The country will need $7.0 billion investment in infrastructure development to gain benefit from transit, according to a report prepared by core committee on transit.

Companies like Bangladesh Bridge Authority, Ital-Thai and other companies can enjoy the depreciation facility on their income.

On raising paid-up capital requirement, the official said this has been raised as per current economic standard because Tk 1.0 million paid up capital is an insignificant amount now.