WPPF (Workers' Profit Participation Fund) is the requirement under the Bangladesh Labour Act for companies above a certain size to set aside 5% of net profit for workers. The 5% is usually split 80:10:10 between the Participation Fund, the Welfare Fund and the Workers' Welfare Foundation Fund. We calculate the allocation, prepare the beneficiary list and distribution, and produce the fund's annual accounts.
Our team has prepared trial WPPF fund accounts, employee-list-based distribution workings and audit support for a large company. The rules here are described in general terms; check the latest amendments and your company's position.
On this page
Which companies it applies to
Under the Labour Act, WPPF applies to companies whose paid-up capital or fixed assets at the end of the previous accounting year exceed set thresholds. Some 100% export-oriented sectors have separate arrangements. Confirm with your legal adviser, against the latest law and amendments, whether your company is covered.
How the 5% is split
| Fund | Share | What happens to it |
|---|---|---|
| Participation Fund | 80% | Usually two-thirds paid in cash to all beneficiaries in equal shares, one-third invested |
| Welfare Fund | 10% | Spent on workers' welfare by decision of the board |
| Workers' Welfare Foundation Fund | 10% | Paid to the government's Workers' Welfare Foundation |
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Two common calculation questions
- Which profit the 5% is based on: 5% of profit before charging WPPF, or 5% of profit after charging it (that is, 5/105 of profit before WPPF). Both are in use; choose a policy once and apply it every year
- Who the beneficiaries are: workers within the legal definition who have served the required period. Management staff are usually excluded. We check eligibility from the employee list
What we do
- Allocation from the year's net profit and the journal entry
- Beneficiary list and per-head share from the employee list
- Accounts for the fund's separate bank account and investments
- The fund's annual accounts and audit documents
- Tax aspects of WPPF coordinated with our sister team at tax.eomsbd.com
Frequently asked questions
By when must WPPF be paid?
The law requires the money to be paid into the funds within a set period after the accounting year ends. Check the current deadline and the consequences of delay in the latest law.
Is WPPF due in a loss year?
WPPF is calculated on net profit, so there is no allocation in a year without profit.
Is WPPF an expense of the company?
In the accounts it is shown as an expense. Its deductibility for income tax has conditions; check the current Income Tax Act.
Talk to us about your accounting work
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Written by the EOMS Hisab accounts team. Last reviewed: . Bangladesh rules change with each Finance Act, SRO and circular. Check rates and thresholds against the latest official source before relying on them.