Bangladesh will complete the  signing of the Economic Partnership Agreement (EPA) with  Japan, the world’s 3rd largest economy, by December 2025 to strengthen bilateral economic relations alongside availing  duty-free market facilities to that country.

“Both the countries are also committed to sign the EPA within  this timeframe,” said Commerce Ministry Senior Secretary Tapan  Kanti Ghosh at a press conference held at the Ministry of Commerce at Bangladesh Secretariat on Wednesday, reports BSS.

The joint press conference was organized to mark the release  of the Joint Study Group report on the proposed Economic  Partnership Agreement (EPA) between Bangladesh and Japan.

Japanese Ambassador to Bangladesh IWAMA Kiminori spoke at the  press conference.

Terming Japan as the world's third largest economy and an  important trade partner of Bangladesh, the Senior Commerce  Secretary said, “For the first time, we’re going to sign such an economic agreement with a large economy. If the EPA is  signed with Japan, we’ll not only get duty-free market  facilities, but also get foreign investment, infrastructures suitable for industries and thus could join the global supply  chain.”

Regarding the final signing of the EPA with Japan, he said, “I  don't see any complications regarding the signing of the EPA.

We’re very much optimistic. Since we’ll graduate from the LDCs  in 2026, the EPA will be signed by December 2025 or January  2026.”

Tapan said since Japan has FTAs with many countries and has  investments in many countries, the EPA will create new  opportunities for Bangladesh to join the global supply chain.

He said Bangladesh has been enjoying duty-free facilities for  exporting products to Japan and would continue to enjoy it  till 2026.

“In the last year, our export growth to Japan was 45 percent,  which was higher than any developed country.

Apart from goods,  there is a potential to develop Bangladesh's relations with Japan in the services and investment sectors,” he said  expressing high hope that if the EPA is signed, it would be  possible to transform that possibility into a reality.

Tapan mentioned that during Prime Minister Sheikh Hasina's  visit to Japan in April this year, it was decided to upgrade  the bilateral relations between the two countries as 'Strategic Partnership'.

In view of this, MoU was signed as a step to enhance trade,  investment and economic cooperation between the two countries.
 
Later, another MoU was signed when the Minister of Commerce of Japan visited Bangladesh.

The Commerce Secretary said that the publication of the joint study group report does not mean that the work of the EPA is  over.

 The two countries announced to conduct a joint feasibility study aimed at finalizing the EPA and thus a report was released today after three rounds of meetings.

In response to a question, Ambassador of Japan IWAMA Kiminori said that the EPA would create a win-win situation for both Bangladesh and Japan for trade expansion and economic development.

“We hope that EPA will play an important role in the  development of an investment-friendly environment in Bangladesh in addition to boosting trade and investment,” he added.

The Japanese Ambassador also said that both the countries are  preparing for signing of the EPA. “As Bangladesh will graduate  from the LDCs in 2026, signing of the EPA should be completed before this,” he added.

It should be noted that both the countries have jointly  identified 17 sectors as areas of economic cooperation for the purpose of implementing the proposed EPA.

MSH

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."