Bangladesh Eliminates Solar Import Taxes to Accelerate Clean Energy Growth

Bangladesh has announced sweeping tax incentives for the solar energy sector, eliminating all major import duties and taxes on solar equipment as part of its national budget for fiscal year 2026-27, unveiled by the country's finance minister in parliament.

Under the new measure, import duty, regulatory duty, supplementary duty, and advance tax on solar-related equipment have been reduced to zero. The policy will remain in effect until June 30, 2031, covering a five-year period, with some provisions eligible for extension.

The move marks a significant shift from the previous tax regime, under which combined import taxes on photovoltaic (PV) equipment ranged from 26.2% to 58.6%. Solar PV modules faced an overall import tax burden of approximately 26.2%, while solar inverters were subject to tariffs of up to 37%. Import taxes on mounting structures and installation systems had previously reached as high as 58.6%.

The zero-duty policy applies to a broad range of solar and energy storage products, including solar PV modules and panels, solar inverters, mounting structures, lithium cells and lithium-ion batteries, battery pack housings, battery energy storage systems (BESS), battery management systems (BMS), UV-protected solar DC cables, battery thermal management systems, and other key components used in solar power generation.

In a separate measure aimed at accelerating renewable energy investment, Bangladesh will grant a 0% tax rate on solar power generation projects, including privately developed power plants, until June 30, 2035. The incentive effectively provides a full corporate income tax exemption for qualifying solar projects, allowing investors to operate without paying tax on profits during the first decade of development.

The government has also introduced incentives for electricity consumers and businesses using solar-generated power. Eligible users will receive a 5% tax rebate on electricity-related expenses, which can be credited against payable income tax.

Bangladesh currently has 1,797 megawatts (MW) of installed renewable energy capacity, of which 1,504 MW comes from solar power. The country's total installed power generation capacity stands at approximately 29,000 MW, meaning renewable energy accounts for around 6% of overall capacity. The share of renewables in actual electricity generation remains even lower.

According to a recent report by the Institute for Energy Economics and Financial Analysis (IEEFA), renewable energy contributes only 2.3% of Bangladesh's grid-connected electricity generation, significantly below the global average of 33.8%.

The latest incentives are designed to substantially reduce the cost of solar projects, attract both domestic and foreign investment, accelerate rooftop solar and energy storage deployment, and help address energy shortages and reliance on imported fuels.

The measures complement Bangladesh's Renewable Energy Policy 2025, under which the country aims to raise the share of renewable energy to 20% by 2030 and further expand deployment by 2050, reducing fossil fuel imports and easing pressure on foreign exchange reserves.

The policy is expected to provide a significant boost for Chinese suppliers, as China remains Bangladesh's primary source of imported solar equipment. The removal of import taxes is likely to lower export costs and strengthen the competitiveness of Chinese solar products in the Bangladeshi market.