The government aims to transform Bangladesh's leather industry into a stronger, export-oriented sector by ensuring maximum utilisation of sacrificial animal hides from Eid-ul-Azha, Commerce Minister Khandakar Abdul Muktadir said on Friday.

Speaking to reporters after inspecting raw hide trading operations at Posta in Lalbagh, the minister said a comprehensive, long-term plan covering development, preservation, processing and export capacity of the leather sector would be placed before the nation by July.

“We believe that through the government's coordinated efforts, active participation of traders and depot owners, and mosque- and madrasa-based hide preservation drives, most of the sacrificial hides this year will be collected in usable condition,” he said.

The minister, who visited Aminbazar on Thursday and Posta and Hemayetpur in Savar on Friday, noted that large volumes of hides had already reached traders and salting was underway. “The full processing cycle normally takes two to three months as hides do not all arrive in Dhaka simultaneously.”

Muktadir stressed the importance of timely salting, warning that hides left untreated for more than four to six hours, especially at temperatures of 38 to 40 degrees Celsius, risk rapid deterioration. Properly salted hides, he said, can be preserved for three to four months.

He outlined the leather production chain from raw hide to wet blue, crust leather and finally finished leather, used to manufacture shoes, sandals, belts and other goods, underscoring why preservation quality directly determines industrial value.

On concerns over hide smuggling, the minister said the relevant authorities had been directed to maintain strict surveillance. “We do not want a single hide to be smuggled out of the country.”

Regarding the Savar leather industrial estate and its Central Effluent Treatment Plant (CETP), Muktadir acknowledged operational shortfalls. The CETP has a project capacity of 25,000 cubic metres per day but is currently functioning at only 14,000 to 18,000 cubic metres. “Reforms would be undertaken to address the gap and attract further investment.”

The minister also called for modernising and mechanising the slaughtering and skinning process to improve hide quality, noting that improper skinning significantly degrades the raw material.

He said Bangladesh's leather and leather goods market, including exports, is currently valued at approximately Tk 12,000 to 15,000 crore, with a substantial domestic market alongside. “The government has already distributed free salt through BSCIC and district administrations to madrasas and collection centres to ensure proper hide preservation.”

Industry Secretary Md Obaidur Rahman, Commerce Secretary (routine duty) Md Abdur Rahim Khan, BSCIC Director General Md Saiful Islam and leaders of the Bangladesh Tanners Association were present on the occasion.

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."