MCCI opposes tax on WPPF contributions

The Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) has opposed a provision in the proposed national budget for FY2022-23 that would require companies to pay tax on their contributions to the Workers Profit Participation Fund (WPPF).

MCCI claims that the provision in the proposed budget, or Finance Bill 2023, is contradictory to the Bangladesh Labour Act and the Companies Act.

The camber came up with its views on the budget in a press release issued on Thursday. In it, MCCI also made some amendment proposals concerning income tax, VAT and customs duty, which they have submitted to NBR for their consideration.

The Labour Act directs companies to share 5 per cent profit with workers before tax and failure to do that will result in penalties. According to Article 244 of the law, the WPPF payments would not be counted as taxable income and that contradicts the provision in the Finance Bill, MCCI claimed.

It argued that any payments to workers are legal expenses for a company. If the government makes tax on WPPF payments mandatory, companies would have to make their contribution after tax deduction. But the Companies Act says that only investors are eligible to receive net profit.

The chamber also demanded a reduction of source tax on goods transportation to 2 per cent from the proposed 5 per cent considering high fuel prices, inflation and industrial expansion.

It also urged the government to increase the tax-free income limit for individuals to Tk 4 lakh from Tk 3 lakh considering the current inflation.

MCCI demanded a 1 per cent import duty rebate on the small equipment, machines, rack, busbar trunking system and dehumidifiers to strengthen fire security measures in factories of exporters.

It proposed to restore 0.50 per cent source tax on exports instead of implementing the proposed 1 per cent.

MCCI said, based on the current industry infrastructure, it will also not be possible to carry out all types of transactions, except cash expenditure and investment up to a total of Tk 12 lakh per annum, through bank accounts to get the 2.5 per cent corporate tax exemption.

To enjoy the same tax cut, it will be very difficult to recruit 25 transgender people, it said and called for reducing the number.