Twelve Chinese companies have proposed investments worth US$9.21 billion in Bangladesh across energy, infrastructure, logistics, manufacturing and education sectors following meetings with Prime Minister Tarique Rahman during his recent visit to China.

The investment proposals were presented when the chief executives and senior representatives of the 12 companies met Prime Minister Tarique Rahman in Beijing on June 25.

Ashik Chowdhury, Executive Director of Bangladesh Investment Development Authority (BIDA), who was poresent at the meeting, said on Saturday that political stability had been restored following the assumption of office by the newly elected BNP government, creating renewed investors confidence.

He said Bangladesh also presented a five-year tax outlook for the first time, highlighting policy stability and long-term predictability to prospective foreign investors.

According to investment proposals, Shanghai SUS Environment Co. Ltd. proposed to invest US$890 million in developing Waste-to-Energy (WTE) plants in Bangladesh.

China Future Energy Group Holding Limited proposed US$250 million for gas field exploration and development, while China Civil Engineering Construction Corporation (CCECC) offered US$650 million to develop and operate the Mongla Port Economic Zone, including bonded warehouse facilities and logistics infrastructure expected to generate around 50,000 jobs.

Shenzhen Kaifa Technology Co. Ltd. proposed investing US$250 million in manufacturing electric smart meters, while SF Express sought to invest US$180 million in cold-chain logistics and bonded warehouse facilities in Mongla to support e-commerce and export industries.

Huaxin Textile Industry Co. Ltd. proposed US$190 million for expanding recycled cotton and yarn production, manufacturing cylindrical lithium batteries and establishing a 200 MW captive solar power plant in the Payra Port Industrial Zone.

Zhongxin Environmental Protection Group proposed the single-largest environmental investment of US$1.65 billion to establish an e-waste recycling and disposal industrial project in the Payra Port Industrial Zone.

CRRC Ziyan Co. Ltd. proposed investing US$190 million in a rolling stock assembly plant through a joint venture with Bangladesh Machine Tools Factory (BMTF), while Sichuan Road & Bridge Group Co. Ltd. proposed a US$4.5 billion investment in the Dhaka-Chattogram Highway Public-Private Partnership (PPP) Project.

China Kepai Education Group proposed investing US$270 million to establish a modern application-oriented university and vocational education industrial park with capacity for 30,000 students, while China Shandong Zhongxin Pharmaceutical Co. Limited proposed US$190 million to develop a large-scale Chinese medicinal herb cultivation industry in Bangladesh.

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."