The National Board of Revenue (NBR) has exempted advance tax and value-added tax (VAT) on capital machinery imported by green shipbreaking yards, to bring in more investment for such yards.

Businesses used to pay 26 percent duty on capital equipment import for the shipbreaking industry.

Through an order on December 22, the NBR exempted green shipyard owners from 15 percent VAT and 5 percent advance tax.

However, the tax administrator kept the rest 5 percent customs duty and 1 percent advance income tax unchanged.

Of the 50 shipyards Bangladesh has, only six have green certificates and 13 are in the process of becoming green, according to the data of the Bangladesh Ship Breakers and Recycling Association (BSBRA).

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None other than green shipyards will be able to import old ships by next June as per the Hong Kong International Convention, BSBRA Vice President and PHP Family Director Zahirul Islam Rinku told The Daily Star.

The Hong Kong International Convention Bangladesh signed in 2023 for the safe and environmentally sound recycling of ships has made it mandatory for local shipyards to be green to be eligible to import scrap ships.

"As a result, most of our active shipyards need a huge amount of equipment to upgrade their yards to green shipyards. Investors in this sector will be encouraged to upgrade their yards due to this government decision."

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The NBR order stated that the capital equipment imported under this facility must be used only in green shipyards and cannot be transferred or sold within 5 years.

According to shipyard owners, the shipbreaking industry started in 1960 and an average of 150 to 200 old vessels are dismantled and recycled in these yards annually.