Japan will provide a $1.5 billion loans for Matarbari Ultra Super Critical Coal-fired Power Project in Cox's Bazar.

Under the project, 'Exchange of Notes' and 'Loan Agreement' for 7th tranche of Matarbari Ultra Super Critical Coal-fired Power Project under the 44th Japanese ODA Loan Package (2nd batch) were signed today between the Government of Bangladesh and the Government of Japan.

Sharifa Khan, Secretary, Economic Relations Division (ERD) signed the 'Exchange of Notes' and the 'Loan Agreement' on behalf of the Government of Bangladesh. 

IWAMA Kiminori, the Ambassador of Japan in Bangladesh signed the 'Exchange of Notes' and ICHIGUCHI Tomohide, Chief Representative, JICA Bangladesh Office, Dhaka signed the 'Loan Agreement' on behalf of the Government of Japan, said a press release today.

The signing ceremony was held at NEC-2 Conference Room of ERD in the capital's Sher-E-Bangla Nagar.

The rate of interest of this loan will be 1.60 percent for construction, 0.10 percent for consultancy services, Front End Fee (at a time) 0.2 percent, and repayment period will be 30 years which includes 10 years grace period.

This project is being implemented to meet growing electricity demand and to improve stable power supply by installing 1200 MW (600MWx2 units) Ultra Super Critical Coal-fired Power Plant at Matarbari Area of Maheshkhali Upazila under Cox's Bazar district. Total cost of the project is Taka 51,854.88 crore (GOB Taka 6,406.16 cr., JICA Taka 43,921.03 cr., CPGCBL Taka 1,527.69 cr.).

Project implementation period is July 2014 to December 2026. Up to August 2023, physical progress of the project is 78.30 percent and financial progress is 65.14 percent.

JICA is providing assistance for this project in different phases. JICA has already provided 437,754 million JPY in 6 tranches. Under this 7th tranche of ODA Loan for this project, JICA will provide 217,556 million JPY.

The release said Japan is the single largest bilateral development partner of Bangladesh. Japan has been providing continuous support for the socio-economic development of Bangladesh since our independence. The ODA commitment has exceeded $30.34 billion till now.

Japanese loans and grants are being utilized in a wide range of areas including power, roads, bridges, telecommunication, agriculture, health, education, water supply and sanitation, rural development, environment, human resource development etc.

The Japanese assistance contributed significantly in overall development of the country.

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."