Boosting hydrocarbon digTax benefit for equipment exim

The National Board of Revenue (NBR) extends tax benefit for importing and re-exporting equipment, machinery, spare parts to facilitate hydrocarbon exploration.

International oil companies (IOCs) will be able to import equipment using this facility under the latest statutory regulatory order (SRO) of the customs wing.

In an SRO, dated March 27, the NBR exempted import duty, VAT and supplementary duty under certain conditions.

The previous SRO, issued in May 2021, is dead as the new one accommodates tools needed for gas discovery here, says NBR member (customs policy) Md Masud Sadiq.

Some items were not entitled to tax benefit in that SRO. As per production-sharing contract with the Petrobangla or its associates, he say, the IOCs are supposed to enjoy it.

"We've extended the facility to encourage foreign investors on gas exploration," adds Mr Sadiq.

IOCs must obtain certificates from energy and mineral resources division on the use of imported machinery for oil-gas exploration, extraction and production.

They also have to give an undertaking to accept legal action of the customs authority in case of any abuse of the facility.

To enjoy duty and tax benefits in case of re-exporting machinery, they must obtain Petrobangla's certification on the products that lost capacity after use.

For broken or unusable products, a firm has to deposit it to the customs authority for auction as scrap.

Petrobangla will have to submit a list of imported products or re-exportable products to the NBR by July 21 of every fiscal year.

The NBR has issued prescribed format of certification and undertaking, including a list of the import and re-exportable products, under the SRO.

Re-exportable products include drilling, direction drilling, work-over, mud-logging and mud-engineering.

Marine vessel for seismic survey, helicopter, anchor boat, Jeep and pickup useable for oil and gas exploration, extraction and production purpose would also entitled to the benefit.

A total of 17 categories of products, machinery and spare parts involved in gas and oil exploration, extraction and production will enjoy the benefit.

Household goods, dredger, all types of refrigerator, transformer oil, office equipment, AC with minimum 200,000-BTU capacity, pre-fabricated building, cables, lubricating oil and other types of oil, steel sheet, steel rod, lay-out plan are tax-exempt.

According to customs officials, the list has been prepared as per requirements of IOCs, put forwarded by energy and mineral resources ministry, to facilitate oil-gas exploration.

The NBR felt the need to extend tax benefit for gas and oil exploration following recent concerns on energy crisis globally in the wake of Russia-Ukraine war.

In another SRO, the NBR exempted the Cricket Celebrates Mujib 100, held on March 29 by Bangladesh Cricket Board, from income taxes.

Fees and honorarium of foreign artists, their hotel or accommodation rents, air fare, transportation cost, imported machinery, sound systems, LED screen, stage construction, fireworks display by event management companies and production expenditure of television would be exempted from payment of taxes.

The tax-exempted amount has to be spent on overall development of the domestic cricket, the SRO said.