Speakers at a discussion on the national budget for fiscal year 2022-23 (FY23) requested the government to reconsider the proposal to impose taxes on the Worker’s Profit Participation Fund (WPPF) of different organizations.
The Institute of Chartered Secretaries of Bangladesh (ICSB) organised the discussion at a city hotel on Tuesday. Officials, corporate leaders, economic sector specialists, heads of professional institutes and associations and dignitaries in different sectors attended the discussion where they discussed some proposals of the new budget and probable impact on the corporates in many ways.
ICSB Senior Vice President Md Azizur Rahman moderated the discussion.
They said provision of imposing taxes on WPPF conflicts with section 244 of the Bangladesh Labour Act, 2006 which allows deduction of the funds allocated to WPPF to arrive at a taxable income.
WPPF is not a dividend rather an expense and as per section 234 (1)(b) of the Bangladesh Labour Act, 2006, a portion of the WPPF amount needs to be paid to a government body namely, Bangladesh Workers Welfare Foundation, they said, adding that imposing tax on an amount donated to a government body is not appropriate, they opined.
In the budget speech, Finance Minister AHM Mustafa Kamal pointed out WPPF is payable from tax profit after tax which seems misunderstanding (misleading) of actual treatment and philosophy of WPPF. As per accounting principles, WPPF is payable from profit before tax.
The speakers at the discussion mentioned said the requirement of an entity to pay WPPF to employees as per the provision of Labor Law (u/s 234) is a compulsion on the company and not discretion.
They said it is not justifiable to impose tax on an expense that has been mandated by the government itself.
Such act is likely to put pressure on compliant businesses as they will now be exposed to huge financial liabilities, they added.
They said multi-national companies are the ones who pay large amounts of WPPF to workers. So, bringing WPPF under tax net will not only harm companies financially but will also affect income of workers, they observed.
It will also put a negative impact on FDI climate as potential foreign investors will be reluctant to invest due to imposition of such tax, they added.
The panel speakers present at the discussion were M. Shahidul Haque, Former Senior Secretary, Government of Bangladesh, Prof. Dr. M. Harunur Rashid, President, Bangladesh Accounting Association, K. H. Masud Siddiqui, Former Secretary, Government of Bangladesh, Shahadat Hossain FCA, President, Institute of Chartered Accountants of Bangladesh, Hossain Sadat FCS, Director, Grameenphone, Akhter Matin Chaudhury FCS, FCA, Council Member of ICSB and Independent Director of UCB, Md Lutfor Rahman, Former Member, NBR, Md. Shamsul Kibria, Dr. Mohammad Abu Yusuf, Joint Secretary-Budget, Finance Division, Finance Ministry, UjjalBikash Dutta, Former Member, BPSC, Shish Hyder Chowdhury, Member of Tariff Commission of Bangladesh.
