Chinese Ambassador to Bangladesh Yao Wen on Thursday said his country wants to conduct more transactions with Bangladesh using Chinese or Bangladeshi currencies instead of the US dollar amid the ongoing dollar rate fluctuation.

"Now it's a worldwide problem. This is the fluctuation of the dollar rate because of the financial and the monetary policy of the US. So, the global south, the developing countries as well as China also are facing the same problem. This is something where China wishes to work with Bangladesh," he said.

Wen also said, "Maybe one of the ways is to use our own currencies. We approached and are engaging with Bangladesh to see what we can do together to use more of our own currencies instead of the US dollar," he added.

The Chinese ambassador said this to reporters after a meeting with Planning Minister Major General (Retd) Abdus Salam at the latter's office in the capital's Sher-e-Bangla Nagar today.

He said that during the meeting, they discussed about the possible areas of cooperation between the National Development and Reform Commission (NDRC) of China and the Bangladesh Planning Commission.

"China has already the 14th Five Year Plan while Bangladesh is having its 8th Five Year Plan. So, we can see we've great potentials to cooperate and work on this area...we can share experiences and can cooperate on this Five Year Plan," he added.

Noting that the NDRC of China and the Bangladesh Planning Commission are almost similar in nature, Wen said, "I believe there is enormous potential to work on this area regarding macro economy and development cooperation. We discussed a lot, we'll follow up on what we've discussed," he added.

The planning minister said that China has shown interest in discussing Bangladesh's Five-Year Plan, adding that China has a strong relationship with Bangladesh and have assisted in the implementation of the country's five-year plans.

Answering to a question, he assured that minor issues would be resolved through discussion regarding disbursement of promised funds from China.

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."