CPD urges neutral tax regime to secure energy future

The Centre for Policy Dialogue (CPD) has urged the government to introduce a neutral tax structure to support Bangladesh's energy transition, arguing that the current fiscal regime heavily favours fossil fuels over renewable energy technologies.

The call came at a media briefing titled "Fiscal Discrimination between Fossil Fuel and Renewable Energy: Alternate Solutions to Address the Energy Crisis" held at the organisation's Dhanmondi office on Sunday.

Presenting the findings of a new study, CPD Research Director Dr Khondaker Golam Moazzem said fossil fuel-based projects had consistently received more than 90 per cent of power and energy development allocations between FY16 and FY26 despite repeated commitments to clean energy.

"LNG imports face a total tax incidence of only 9.5 per cent, with zero VAT and only 2 per cent advance income tax, while lithium-ion batteries face 61.8 per cent and electric vehicles up to 93.16 per cent taxes," he said.     

The study examined 50 energy-sector products across seven technology categories, including solar, wind, energy storage, electric vehicles, grid infrastructure, fossil fuels and fossil fuel-based power generation equipment, using the National Board of Revenue's FY2025-26 tariff schedule.

According to CPD, while solar and wind generation equipment face total tax incidences of around 28-31 per cent, enabling technologies essential for renewable integration face much higher burdens. Grid transformers, energy storage systems and electric vehicles are taxed at rates ranging from 61.8 per cent to 93.16 per cent.

"The country's tax and tariff regime imposes far lower burdens on fossil fuel imports than on technologies critical for integrating renewable energy into the national grid," Dr Moazzem said, adding that the policy contradicts the government's target of generating 10 per cent of electricity from renewable sources.

"This is not a neutral tax structure. It is discriminatory, and it is costing Bangladesh its energy future."