NBR Slashes Solar Equipment Import Tax From 17% to 1% as Bangladesh's Energy Crisis Deepens

A Second Attempt at Making Solar Cheap

The National Board of Revenue has cut the import tax on most solar power equipment to just 1 percent, down from an effective 17 percent, in an order that takes effect for 180 days from September 16. The move covers mounting structures, solar panels, lithium batteries built for photovoltaic systems, inverters, battery management systems and the monitoring and control equipment that goes with them. For importers who have spent months navigating conflicting rules on what actually qualified for tax relief, the new order from the Internal Resources Division, signed by acting secretary Ahsan Habib, is meant to finally settle the question.

The Second Time Bangladesh Has Tried This

This is not, in fact, the first time the government has promised cheap solar imports this year. Back in June, as part of the national budget, Finance Minister Amir Khosru Mahmud Chowdhury announced a far more sweeping package, a 0 percent corporate tax rate for the entire solar power sector through 2035, a 5 percent rebate on solar electricity bills for consumers, and duties on a long list of solar components, including inverters, lithium cells, battery energy storage systems and UV protected DC cables, all cut to zero. The declared goal was to help Bangladesh reach 20 percent clean electricity by 2030 and as much as half by 2050, starting from a renewable base of just 1,797 megawatts, of which 1,504 megawatts came from solar.

Three months later, customs houses were reportedly still charging some solar importers duties as high as 23 to 64 percent on certain categories of equipment, according to trade sources, while others faced the older 17 percent structure, a combination of 15 percent VAT and a 2 percent advance income tax, because the specific HS codes covering their goods had never been clearly reconciled with the June budget language. This week's order functions less like a brand new incentive and more like a correction, an attempt to actually deliver on paper what the budget had promised in principle five months ago.

What Changed, in Plain Numbers

Import Situation	Tax Burden Before This Order	Tax Burden Now
Industrial-use solar imports under the clarified structure	15% VAT + 2% advance income tax (17% total)	1% duty, VAT and advance tax waived
Commercial imports still caught in the old customs structure	Reported duties of 23% to 64% on some equipment categories	1% duty on most equipment, per the new order

The gap between those two rows is the story in miniature, different solar equipment had been sitting under different tax treatments depending on how customs officers classified it, and the new order is an attempt to flatten that inconsistency into one simple number across the board, at least for the next six months.

The Fine Print Importers Have to Clear

The concession is not automatic. Manufacturers must certify that lithium batteries are new and meet the IEC 62619:2022 international safety standard, a requirement clearly aimed at keeping substandard or secondhand battery cells out of a market that has occasionally struggled with exactly that problem. Importers also need a confirmation from the Bangladesh Sustainable and Renewable Energy Association and a formal undertaking that the equipment is being brought in solely for solar power development, not for resale into unrelated uses. Customs clearance requires sign off at the deputy or assistant commissioner level rather than a routine desk clearance, adding a procedural step that importers say could slow down shipments even as it reduces their tax bill.

Why the Timing Matters

The order lands in the middle of an energy crunch that has been the backdrop to almost every other economic story in Bangladesh this month. Garment factory owners have been asking for zonal gas rationing to avoid production stoppages, the Dhaka Stock Exchange's own three day rally this week was credited partly to assurances of improved gas supply to industrial hubs, and BGMEA has publicly confirmed that gas and power shortages remain a live threat to factory operations even though no plant has been forced to close yet. Against that backdrop, cutting the cost of solar equipment by roughly sixteen percentage points is less a green policy gesture than a fairly direct attempt to give industrial users, and eventually households, a way to generate power that does not depend on a gas pipeline network that keeps coming up short.

Who Actually Gains

Large manufacturers who can front the capital for rooftop solar installations stand to benefit fastest, since a lower import tax shortens the payback period on what is still a significant upfront investment. Walton and other bigger industrial players, the kind of firms Bangladesh Financial Review has previously reported are best positioned to absorb new compliance costs elsewhere in the economy, are also the companies with the balance sheets to move quickly on rooftop or captive solar generation once equipment costs fall. Smaller factory owners and individual households face a tougher calculus, since even a 1 percent duty on top of the equipment's dollar cost, converted at a taka that has been under its own pressure, still means a large one time outlay that not everyone can absorb no matter how favourable the tax treatment.

The Revenue Question Nobody Is Asking Out Loud

There is an obvious tension between this order and the state of NBR's own finances. Bangladesh Financial Review has reported that VAT collections ran roughly 21 percent below last year's pace in July and August, a shortfall of nearly Tk4,965 crore that has the revenue board reconsidering its own quarterly filing system. Every duty and tax waived on solar imports is revenue NBR is consciously giving up at a moment when it is already scrambling to explain a collection shortfall to the finance ministry. Officials appear to be betting that a stronger, more reliable domestic power supply is worth more to the wider economy, and indirectly to future tax collection, than the near term revenue this particular waiver forgoes, a bet that will only be validated if solar adoption actually accelerates within the 180 day window before the concession, as written, expires.