Commerce Minister Tipu Munshi on Tuesday said that Bangladesh aims to earn $300 billion in exports by 2041, and the government is working relentlessly to diversify the export sector taking various special initiatives to reach the goal.

The minister made the remarks while addressing a press conference organized by Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB) on the occasion of '4th Bangladesh Leather Footwear and Leather Goods International Sourcing Show-BLIS-2023' at Hotel Sonargaon in the capital.

The Commerce Minister said export diversification is one of the prime tools of influencing a country's economic growth. Bangladesh currently rises in the world market as one of the most export-oriented countries in Asia.

“The commerce ministry is formulating innovative policies and business-friendly policies to attract foreign buyers, brands and investors in order to consolidate export-oriented growth and diversify exports,” he added.

The minister said that leather products are contributing significantly to lift the exports earning to new heights. Bangladesh is fast establishing itself as a reliable destination for the supply of leather products to the global market.

“Our product quality progressed rapidly, maintaining the international standards. There is no alternative to branding these products to promote them in the international market,” the minister said.

He expressed optimism that Bliss-2023 would make an outstanding contribution to achieving this goal.

The minister said the Commerce Ministry has taken various timely steps including implementation of specific projects for international branding and marketing of local products. In this context, the Ministry of Commerce and Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB) are going to organize "Bangladesh Leather Footwear and Leather Goods International Sourcing Show-Bliss-2023" on October 12-14 at International Convention City Bashundhara (ICCB).

In addition to the exhibition, three breakout sessions will be held in which more than 200 industry related individuals, policy makers and local and foreign guests, as well as students of different universities, will participate.

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."