The government is likely to reintroduce a broad scheme for whitening black money without any questions asked in the upcoming fiscal year. Speculations suggest that individuals with undisclosed income can legalize their black money by paying a flat 15% tax in the forthcoming budget.
Sources involved in the process mentioned that those taking advantage of this opportunity would receive general clemency, and no government agency would question the income source of the black money holders. This has been confirmed by officials at the Finance Ministry and the National Board of Revenue (NBR).
A similar scheme in the 2020-21 fiscal year allowed black money holders to legalize their assets at a 10% tax rate, resulting in approximately Tk20,600 crore being legalized by 12,000 taxpayers. However, the scheme was later revoked due to poor response from black money holders.
In the 2022-23 fiscal year, the government attempted to bring back laundered money, but this effort also did not yield significant results. During the 2020-21 fiscal year, the highest individual income tax rate was reduced from 30% to 25% to mitigate the economic impact of the Covid-19 pandemic, but the NBR is now considering reinstating the 30% tax rate.
If the government allows wholesale whitening of black money, individuals could legalize their funds by paying only half the individual tax ceiling. Although the Income Tax Act-2023 permits legalizing black money, it does not support wholesale whitening. Under current law, taxpayers can legalize black money by paying up to 25% tax and a 10% fine, or by paying a specified tax when purchasing property, though the source of income may still be investigated.
Policy Research Institute Executive Director Ahsan H Mansur criticized the scheme, stating that it would discourage honest taxpayers and create injustice. He noted that true taxpayers pay 30% in taxes, while those evading taxes could whiten their black money with just a 15% tax.
In the 2020-21 fiscal year, 11,839 individuals legalized their black money, resulting in the NBR collecting Tk2,064 crore in taxes. Among these, professionals such as doctors, government employees, garment exporters, bank directors, and gold traders were included. The majority of the legalized black money was either in cash or deposited in banks, while the rest was invested in the housing sector or stock market.
Since Bangladesh’s independence in 1971, various governments have allowed black money whitening schemes, but these measures have typically received poor responses.
