The Foreign Investor’s Chamber of Commerce and Industry (FICCI) has expressed some concerns about the proposed national budget for the fiscal year 2022-23 along with its probable implication for the business and foreign investments in Bangladesh.
At a media briefing held in a city hotel on Wednesday, a potentially business-friendly budget will unravel the benefits unless some of the provisions such as Workers’ Profit Participation Fund (WPPF) are reversed, reports UNB.
FICCI President and Chief Executive Officer (CEO) OF Standard Chartered Bank Naser Ezaz Bijoy presided over the event.
Among others, Rupali Chowdhury, Advisor, FICCI Advisory committee and Managing Director, Berger Paints; Zaved Akhtar, Director, FICCI, Managing Director & CEO, Unilever Bangladesh Ltd.; Shehzad Munim, advisor, FICCI advisory panel and MD, British American Tobacco Bangladesh Co. Ltd; Deepal Abeywickrema, Director, FICCI & Chairman, FICCI Tariff, Taxation and Regulatory Affairs Committee and Managing Director, Nestle Bangladesh Ltd.; Sazzad Rahim Chowdhury, Coordinator- Tariff, Taxation and Regulatory Affairs Committee and CFO, Berger Paints Bangladesh Ltd were present in the event. The programme was hosted by Executive Director of FICCI.T. I. M. Nurul Kabir.
The proposed Finance Bill incorporated a provision by which a company will have to pay tax on its contribution to the Workers’ Profit Participation Fund (WPPF), which will ultimately increase the income tax burden of the companies and similarly increase the effective tax rate, said the chamber body.
It said contribution to WPPF has been proposed as inadmissible expenses based on the idea that it is an apportionment of profit from after-tax profit like a dividend, while the fact is, it is a statutory payment for the benefit of the employees, which is paid from pre-tax profit as per the law.
FICCI has also recommended a few changes to the Conditional Reduction of the Corporate Tax Reduction by 2.5 per cent.
As per the Finance Bill 2022, certain types of listed companies that have issued more than 10% of their shares through IPO will be able to enjoy the reduced tax rate.
FICCI proposes that this provision should be amended by clearly mentioning at least 10% shares of a listed company must be held by the public in order to avail of such a reduced rate.
Conditional Reduction of the Corporate Tax Reduction by 2.5 per cent also mentioned that all receipts must be collected through banking channels.
FICCI proposes that this provision should be amended and the law should allow at least 50 per cent of the proceeds to be collected through banking channels to avail such a reduced tax rate.
From next year the ceiling can be gradually increased by 10 per cent. On the same it says, all investments and expenses in excess of Tk 1.20 million must be paid through the banking channels.
FICCI proposes that section 30 of the ITO, 1984 should be amended to remove the contradiction and NBR should allow at least 10 per cent of the expenses of corporate to be paid through the non-banking channel to avail such a reduced tax rate.