DCCI for tax withdrawal from staff welfare funds

The Dhaka Chamber of Commerce and Industry (DCCI) yesterday demanded withdrawal of tax on welfare funds for private sector employees, including provident, pension and gratuity funds, to end discrimination in taxation with regard to public servants.

The government imposed a 27.5 percent tax on incomes from provident and other funds through Income Tax Law-2023 from this fiscal year.

Later, the tax rate was reduced to 15 percent in the face of demands from various sections, including businesspeople.

The law, however, has exempted government-managed provident funds from the purview of the tax.

The demand was made by the chamber's representatives who were presenting budget proposals for fiscal year 2024-25 before the National Board of Revenue (NBR) at the latter's office.

If the government imposes the tax for both sectors, it will definitely expand the tax net, otherwise it may lead to discrimination between private and public sector employees, they added.

In order to reduce the cost of borrowing from foreign funds for the private sector, the DCCI also demanded cancellation of a source tax on the interest against foreign loans.

Source tax imposed on instalments of foreign loans should be withdrawn as it may discourage foreign direct investment inflow and normal credit flow to the private sector, they added.

The DCCI also emphasised on easy and business-friendly tax management, widening the tax and VAT net, full automation of the taxation system, encouraging local industrialisation and ensuring an investment-friendly environment in the country.

NBR Chairman Abu Hena Md Rahmatul Muneem said the NBR always formulates policies and guidelines bearing in mind the need for increasing revenue generation, curbing money laundering, local industry development and protection of local market as well as sustainable environment protection.

He urged the business community to inform the NBR regarding their problems and challenges they were facing in doing business.

About the government tax benefits, Muneem said some businesses abuse the tax benefits and use it as a tool to launder money abroad.