FICCI unhappy at some budget proposals including tax on WPPF
A potentially business-friendly budget will unravel the benefits unless some of the provisions such as Workers Profit Participation Fund (WPPF) are reversed.
The Foreign Investor's Chamber of Commerce and Industry (FICCI) at a press briefing in the city on Wednesday expressed some concerns about budget proposals along with its probable implication on domestic and foreign investments.
Naser Ezaz Bijoy, President, Foreign Investors' Chamber of Commerce & Industry (FICCI) and Chief Executive Officer (CEO), Standard Chartered Bank presided over the event.
Among others, Ms. Rupali Chowdhury, Advisor, FICCI Advisory committee and Managing Director, Berger Paints; Zaved Akhtar, Director, FICCI, Managing Director and CEO, Unilever Bangladesh Ltd.; Shehzad Munim, advisor, FICCI advisory panel and MD, British American Tobacco Bangladesh Co. Ltd; Deepal Abeywickrema were present.
Director, FICCI and Chairman, FICCI Tariff, Taxation and Regulatory Affairs Committee and Managing Director, Nestle Bangladesh Ltd.;Mr. Sazzad Rahim Chowdhury, Coordinator- Tariff, Taxation and Regulatory Affairs Committee and CFO, Berger Paints Bangladesh Ltd were also present. FICCI hosted the programme.
Speakers said the proposed Finance Bill incorporated a provision in the budget by which a company will have to pay tax on its contribution to the Workers' Profit Participation Fund (WPPF), which will ultimately increase the income tax burden of the companies and similarly increase the effective tax rate.
The contribution to WPPF has been proposed as inadmissible expenses based on the idea that it's an apportionment of profit from after-tax profit like a dividend, while the fact is that it is a statutory payment for the benefit of the employees, which is paid from pre-tax profit as per the law.
Such an imposition is inconsistent with the tax-friendly environment that the government has been trying to build over the years and a diversion from the current provision of the Labor Law 2006.
FICCI proposes that this provision should be included in section 29 as an allowable expense instead of in section 30 of the ITO, 1984 as an inadmissible expense. FICCI has also recommended a few changes to the Conditional Reduction of the Corporate Tax Reduction by 2.5pc.
As per the Finance Bill 2022, certain types of listed companies that have issued more than 10pc of their shares through IPO will be able to enjoy the reduced tax rate. FICCI proposes that this provision should be amended by clearly mentioning at least 10pc shares of a listed company must be held by the public in order to avail of such a reduced rate.
Conditional Reduction of the Corporate Tax Reduction by 2.5pc also mentioned that all receipts must be collected through banking channels. FICCI proposes that this provision should be amended and the law should allow at least 50pc of the proceeds to be collected through banking channels to avail of such a reduced tax rate.
From next year the ceiling can be gradually increased by 10pc. On the same it says, all investments and expenses in excess of Tk. 12 lac must be paid through the banking channels. FICCI proposes that section 30 of the ITO, 1984 should be amended to remove the contradiction and NBR should allow at least 10pc of the expenses of corporate to be paid through the non-banking channel to avail of such a reduced tax rate.