The government will import a cargo of liquefied natural gas (LNG), having 33.66 lakh MMBtu, from the Vitol Asia Pte Ltd of Singapore at a cost Tk 429.40 crore to meet the growing gas demand in the country.

Cabinet Committee on Government Purchase (CCGP) in a meeting, with Finance Minister Abul Hassan Mahmood Ali in the chair, approved a proposal of state-owned Petrobangla in this regard, reports UNB.

As per the proposal, placed by the Energy and Mineral Resources on behalf of the Petrobangla, each unit of the LNG will cost $9.93, a price lowest in last two years.

After the meeting, Additional Secretary of the Cabinet Division Syed Mahmud Khan informed the reporters that the supplier was selected from the limited listed companies through a bidding in the international spot market under Master Sale and Purchase Agreement (MSPA).

The Rapid Increase in Supply of Electricity and Energy (Special Provisions) Act 2010 (Amendment 2021) was followed in this regard.

Sources in the Energy and Mineral Resources Ministry said that Bangladesh has planned to import a total of 13 LNG cargoes from January to June this year.

This has been the second cargo as the first one was given approval in the last week’s meeting on  January 22 under which Switzerland-based company 'TotalEnergies Gas and Power Limited' will supply a cargo having the same volume 33.66 lakh MMBtu with each unit price  $10.88.

Earlier the government signed 'Master Sale and Purchase' Agreement (MSPA) with 22 shortlisted companies  to import LNG from the international spot market.

Imports of LNG from the spot market were suspended from July 2022 to January 2023 as the price of LNG from the spot market increased many times while the government was facing dollar crisis.

Currently, the country has been experiencing a severe gas crisis as production came down to nearly 2500 million cubic feet per day (mmcfd) while the demand is about 4000 mmcfd.

As a result, household consumers in many areas are not getting gas for cooking while power and industrial productions are being seriously disrupted due to gas shortage. 

In the meantime, the government increased the gas price for both captive power and public sector power generation on January 18, 2023.

Through an order, the price of gas used for power generation was set at Tk 14 per cubic metre, while the price of gas to be used in captive power and industry was set at Tk 30 per cubic metre.

Meanwhile, the CCGP approved two separate proposals to import a total of 60,000 metric tons (MT) of urea fertiliser from Qatar and Saudi Arabia at a cost of Tk 223.84 crore under the state contracts.

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."