The government has decided to organise roadshows soon to attract local and foreign investment in closed and loss-making state-owned factories as part of its efforts to revive idle industrial units and improve their performance.

The decision was taken at a meeting on the operation and management of closed factories under the Ministry of Industries, said PM’s Deputy Press Secretary Hasan Shiplu.

The meeting was held at the Prime Minister’s Office in the Bangladesh Secretariat on Thursday with Prime Minister Tarique Rahman in the chair.

Shiplu said officials concerned were directed to complete the necessary preparations within this month for the planned roadshows.

During the meeting, he said, senior officials of various organisations under the Ministry of Industries presented detailed reports on the current condition of closed and loss-making factories, outlining their challenges, prospects and possible solutions.

Shiplu said the Prime Minister instructed the authorities concerned to identify effective ways to reopen closed factories as quickly as possible and turn loss-making units into profitable enterprises.

He said Tarique Rahman also placed special emphasis on attracting both local and foreign investment to these industrial establishments.

Officials informed the meeting that recommendations from an expert committee are being sought to help reopen the closed factories and improve the performance of those operating at a loss, the deputy press secretary added.

Industries, Commerce, and Textiles and Jute Minister Khandakar Abdul Muqtadir, Prime Minister’s Adviser on Economy and Planning Rashed Al Mahmud Titumir, Executive Chairman of the Bangladesh Investment Development Authority Chowdhury Ashik Mahmud Bin Harun, better known as Ashik Chowdhury, Principal Secretary to the Prime Minister ABM Abdus Sattar and senior officials of the Ministry of Industries attended the meeting.

END/UNB/ASA

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."