The World Bank's Board of Executive Directors have approved $650 million to help Bangladesh invest in infrastructure critical for developing the Bay Terminal deep seaport.

The Bay Terminal will significantly improve Bangladesh's global trade competitiveness and reduce import and export costs by increasing port operational efficiency and mobilizing private investment.

The Bay Terminal Marine Infrastructure Development Project will construct a 6 km climate-resilient breakwater to protect the harbor from the force of waves, current, and extreme weather.

It will also carry out dredging of the port basin, entrance, and access channels. The new, modern Bay Terminal, to be operated by leading international terminal operators, will accommodate larger size vessels, such as panamax vessels, and substantially decrease vessel turnaround time, potentially saving the economy about US$1 million daily, said a press release.

Currently, the Chattogram Port-which is the maritime gateway for over 90% of Bangladesh's international trade volume and 98% of its container traffic-can only receive small feeder vessels during limited hours of the day.

"Bangladesh's international trade heavily relies on Chittagong Port, which faces significant capacity constraints," said Abdoulaye Seck, World Bank Country Director for Bangladesh and Bhutan.

"The Bay Terminal will be a game changer. It will improve Bangladesh's export competitiveness through enhanced port capacity and reduced transportation cost and time, opening new opportunities to key global markets." he added.

Moreover, the project will mobilize private investment for the development of container terminals.

 The World Bank investment along with the government funding will bolster investor confidence and contribute to mitigating risks associated with the overall Bay Terminal Development.

Furthermore, the World Bank Group's private sector arm, the IFC is considering investing in one of the proposed private sector led terminal.

"The Bay Terminal will contribute to modernizing the country's seaport infrastructure and improving its connectivity to regional and international markets," said Hua Tan, World Bank Senior Transport Specialist and Team Leader for the Project.

The Bay Terminal, located in the Anandanagar/Sandwip channel, west of the Chattogram port and close to existing road and rail links to Dhaka, is expected to handle 36 percent of Bangladesh's container volumes. 

Over one million people, half of whom women, are expected to directly benefit from improved access to sustainable transport services, including shipping companies, business communities, importers, exporters, and freight forwarders.

In FY 23-24, the World Bank committed a record $3.4 billion in support to Bangladesh, including this project.

The World Bank was among the first development partners to support Bangladesh following the country's independence. Since then, the World Bank has committed about $42.3 billion in grants, interest-free and concessional credits to the country.

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."