Bangladesh NBR Cuts Solar Equipment Import Tax From 17% To 1%

☀ The National Board of Revenue (NBR) has cut the tax on solar power equipment imports from 17 percent to just 1 percent, extending the benefit to commercial importers for the first time. The benefit will remain effective for 180 days from the date of issuance of the relevant statutory regulatory order (SRO), the revenue authority said in a press release yesterday.

📊 This builds on an earlier tax cut announced from the beginning of fiscal year 2026-27. At the time, imports were subject to 15 percent value added tax and 2 percent advance income tax, bringing the total tax burden to 17 percent. The NBR said the move aims to lower costs for solar projects and speed up renewable energy expansion amid the global energy crisis and domestic electricity shortages. It expects the concession to boost generation capacity, reduce fossil fuel dependence and strengthen national energy security.

💰 Tax Reduction Details

• 💰 Previous total tax: 17% (15% VAT + 2% advance income tax)
• 💰 New total tax: 1%
• 📊 Tax reduction: 16 percentage points (94% reduction)
• 📅 Duration: 180 days from SRO issuance
• 👥 Eligibility: Extended to commercial importers (first time)

📜 Covered Equipment

The tax break covers equipment such as mounting structures, solar panels, lithium batteries used with photovoltaic generators, inverters, battery management systems, and monitoring and control systems. The breadth of covered equipment is significant — it addresses the full solar system value chain rather than just panels, recognising that battery storage, inverters and monitoring systems are equally critical components of functional solar installations.

✅ Qualifying Conditions: Safety Standards And Certification

To qualify, importers must meet specific conditions, including providing manufacturer certification that the lithium batteries are new and comply with IEC 62619:2022 safety standards. Additionally, undertakings from company leadership and the Bangladesh Sustainable and Renewable Energy Association are required to confirm that the equipment will be used solely for solar power development. Customs clearance will require verification and approval at the deputy or assistant commissioner level.

The IEC 62619:2022 battery safety standard requirement is a critical safeguard — it ensures that imported lithium batteries meet international safety specifications for stationary energy storage applications. Without this requirement, the tax cut could inadvertently facilitate the import of substandard or degraded batteries that pose safety risks including thermal runaway, fire and environmental contamination. The requirement for BSREA (Bangladesh Sustainable and Renewable Energy Association) undertakings adds a layer of industry self-regulation — the association vouches that the equipment will be used for solar power development rather than being diverted to other applications.

🌏 Strategic Context: Renewable Energy Acceleration

For Bangladesh's broader renewable energy strategy, the NBR tax cut represents a meaningful structural intervention. The 16 percentage point tax reduction — from 17% to 1% — effectively removes the fiscal barrier that has historically made imported solar equipment significantly more expensive in Bangladesh than in regional peers. This aligns with the government's 4,000 MW rooftop solar target, the Tk 1,500 crore solar financing fund at 6% interest, the Tk 10.50 grid-feed tariff for rooftop solar with battery storage, and the 918 MW IPP solar pipeline — collectively creating a comprehensive policy framework for renewable energy scale-up.

The 180-day duration of the tax cut — approximately 6 months — creates a time-limited window that incentivises accelerated procurement. Importers who delay beyond the 180-day period would face the full 17% tax burden again, creating urgency for project developers to finalise equipment orders and complete imports within the incentive window. This time-bound approach is designed to catalyse immediate action rather than gradual adoption.

The NBR did not disclose the expected revenue loss or the additional power generation capacity likely to result from the tax cut. The revenue loss from the 16 percentage point tax reduction would depend on the volume of solar equipment imported during the 180-day window — if the tax cut successfully catalyses large-scale solar equipment imports, the revenue loss could be substantial, though offset by the long-term economic benefits of expanded renewable energy capacity.

The coming months will reveal whether the tax cut — combined with the broader solar incentive framework — can meaningfully accelerate Bangladesh's renewable energy deployment. If successful, the combination of reduced equipment costs, concessional financing, attractive tariffs and now dramatically lower import taxes could create the kind of integrated policy environment that has driven rapid solar adoption in regional peers including India and Vietnam. For Bangladesh's energy security and climate commitments, the NBR tax cut is a strategically important addition to the renewable energy policy toolkit.