Bangladesh Securities and Exchange Commission (BSEC) Chairman (Senior Secretary) Professor Shibli Rubayat-Ul-Islam has urged the investors to invest more in the capital market now for taking the highest benefits from boosted economy after the upcoming national election, reports BSS.

He said the ongoing political situation is smooth. It is the best time for intelligent investors to invest more in the capital market. After the national polls, economy will boom again and from the economy, they will gain the highest benefits.

The BSEC chief expressed his firm optimism to get a boosted capital market after the national polls, saying that no vested quarter would be allowed to play any game anymore with the share market.

"Due to Covid-19 pandemic and Russia-Ukraine war, many capital markets across the world witnessed ups and downs on a large scale, but Bangladesh's capital market didn't show so much volatility. We hope that unrest will end after the election. The impact will also come to our capital market," he added.

Shibli Rubayat-Ul-Islam, however, said the commission is working to ensure that investors do not face any loss even if they cannot make much profit in the current challenging times.

Referring to the shortage of foreign currency in the country, he said, "Foreign currency is being used for the industrialisation and infrastructural development of the country, which will benefit us in the near future. Considering the economic context, the next five years will be a golden period for Bangladesh."

He said that the BSEC has taken a strict stance on maintaining regulations, which has subsequently boosted the investors' confidence.

To protect the investors' interest, he said, BSEC's legal, monitoring and surveillance wings are always on the vigil. Thus, there is no possibility for the vested quarters to indulge in wrongdoing, he added.

The BSEC chairman said Bangladesh is now recognised as an attractive destination for investment in the world.

He mentioned that many research organisations have published positive reports on the economic development of Bangladesh and many investors from different corners of the world now want to invest in Bangladesh.

Companies and organisations will be required to file tax returns on the income generated by employee welfare funds from the current fiscal year and pay a 27.5 percent tax on the earnings. 

The Income Tax Act 2023 incorporates the provision, lifting the tax exemption and amnesty on the compulsion to file returns for funds such as provident funds, gratuity funds and workers' profit participation funds maintained by the private sector.

The law, however, has exempted government-managed provident funds from taxation, raising questions.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce & Industry, said there were many other avenues to collect tax.

"Employees benefit from provident funds after their retirement. So, the authority should not slap taxes on retirement benefit."

He said while levying the tax, the government has not treated provident funds of the private and public sectors equally.

"It is discriminatory," he said, adding that they would appeal to the tax authority for the withdrawal of the tax on income from provident funds.

Debabrata Roy Chowdhury, director for legal, regulatory and corporate affairs at Nestlé Bangladesh PLC, said the introduction of income tax on trust funds would lower the overall income from such schemes.

"This will have an adverse long-term impact on retired employees of private organisations."

Chowdhury urged the authority to address the issue in line with the spirit of the government's initiatives aimed at ensuring social security for private sector employees.

"The recent introduction of the universal pension scheme for private sector employees is a good example of that."

A senior official of the NBR, on condition of anonymity, said the income of government-managed provident funds was exempted in line with the Provident Fund Act 1925.

He said provident funds under the private sector had been historically exempted and there was no requirement to submit tax returns. As a result, it was unclear whether the funds were properly utilised.

"From now onwards, we will see proper disclosure."

The tax official said the contribution of payroll tax is about 3 percent of the total income tax although it should increase as the economy is growing.

Md Shahadat Hossain, a former president of the Institute of Chartered Accountants of Bangladesh, said income from investment in savings certificates, where people invest as a source of future earnings, is already taxed.

"From that perspective, the imposition of tax on provident and other employee welfare funds seems okay."

However, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said social protection for private sector employees was low.

"Provident and other workers' welfare-related funds provide little social protection. The imposition of tax will increase inequality. But there can't be any discrimination in taxation between private and government provident funds."

Khan, citing the latest income tax law that replaced the Income Tax Ordinance 1984, said the NBR tried to find new avenues to increase tax collection and improve the nation's revenue-gross domestic product ratio, which is one of the lowest in the world.

"We can see the desperation of the tax authority to boost collection. This ultimately reveals the inability of the NBR to catch the tax evaders and illicit money makers."