The government, however, plans to legalize black money by allowing it to be invested in industries with an aim to boost private investment
Bangladesh's business community is against any scheme of whitening the black money, but supportive of fiscal measure to legalize undisclosed and untaxed money in the upcoming budget for the next financial year (FY2019-20).
The government, however, plans to legalize black money by allowing it to be invested in industries with an aim to boost private investment.
Black money holders will not face any questions about the source of the money if they invest in industries and pay a certain amount of tax, a senior official at the finance ministry said.
The government believes that by boosting investment, the move will help generate employment in the private sector.
Currently, the National Board of Revenue (NBR) allows untaxed income to be invested in the stock market and residential buildings and apartments.
However, it is mandatory to mention the source of the undisclosed income while investing it in the stock market.
The opportunity to legalize black money in the industrial sector was first introduced in FY2003-04, but was withdrawn after two years.
In FY2006-07, the caretaker government also offered the scope for converting illegal earnings into white money by paying a penalty.
Neither instances resulted in a positive response, said revenue officials.
President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Sheikh Fazle Fahim urged that, if offered in the proposed budget, the scheme should be restricted only to legally earned undisclosed money.
“It should not be offered for tainted money; only for money earned through legitimate means,” the FBCCI president said, adding that this facility may be offered for once only.
Dhaka Stock Exchange Brokerage Association (DBA) President Shakil Rizvi also echoed FBCCI's stance.
Shakil said money whitening schemes might be given only for those who have legal income, but did not declare their earnings to the government.
“Money earned through corruption, illegal arms trading and narcotics trade should not be eligible for this facility,” Shakil said, adding that Bangladesh would benefit if undisclosed legal income is brought back to the formal economy through a national fiscal plan.
Former president of the Dhaka Chamber of Commerce and Industry (DCCI) Abul Kasem Khan also said illegally earned money must not be converted into white money through a policy in the upcoming budget.
“We cannot accept any offer which would legalize tainted money,” Kasem said.
Former adviser to the caretaker government, AB Mirza Azizul Islam said the move to legalize black money will backfire, as the facility did not yield any positive outcome for the economy in the past.
“I do not support it [money whitening facility],” Aziz told Dhaka Tribune.
He stated the government would be unrealistic in assuming that crores of money siphoned-off abroad could be brought back to the local economy with the scheme.
“The facility will encourage the corrupt to amass more wealth through illegal means, and discourage honest industrialists and taxpayers.”
Ibrahim Khalid, former deputy governor of Bangladesh Bank said the plan to formalize black money in the economy through incentives is immoral and could demean the moral strength of the government.
Bangladesh Economic Association (BEA) at its budget proposals sought budgetary measures to legalize and bring back black money worth at least Tk20,000 crore to the formal economy.
According to the BEA estimate, Bangladesh has around Tk5 trillion to Tk7 trillion of black money.