• Monday, May 23, 2022
  • Last Update : 04:24 pm

Money whitening facility proposed

  • Published at 05:14 pm June 13th, 2019
web-black money
Representational image Syed Zakir Hossain/Dhaka Tribune

According to BEA estimate, Bangladesh has around Tk5 trillion to Tk7 trillion of black money

The finance minister has proposed a provision that will allow investors to legalize black money through investment in economic zones (EZs) and high-tech parks, with no question on the sources of the funds so long as the investors pay a 10% tax on the invested amount.

Finance Minister AHM Mustafa Kamal made the proposal while placing the national budget for FY2019-20 in parliament on Thursday. 

This is the first national budget since the Awami League government took charge, for the second consecutive term, after the general election on December 30 last year.

“I propose a new provision in the income tax law to accept investment in EZs and high-tech parks, with no questions on the sources of the funds by the Income Tax Department if the investor pays 10% income tax on the invested amount,” the finance minister said.

Currently, the Income Tax Department does not raise any question about the sources of funds for purchase or construction of apartments or buildings, if the purchaser pays a 10% tax on the amount. 

However, taxpayers rarely avail the opportunity as they would have to pay a higher tax overall.

Also Read- Business community opposes black money whitening scheme, but favours offer for undisclosed money

In his budget speech, the finance minister further proposed that existing tax rates be decreased, so that taxpayers are encouraged to voluntarily disclose tax returns on purchase or construction of apartments and buildings, and can be included in the tax net.

Dr Iftekharuzzaman, executive director of Transparency International Bangladesh told Dhaka Tribune that this proposal is unethical, unconstitutional, and indiscriminate.

“Giving the opportunity to whiten black money is contrary to section 20 (2) of the constitution, and is also meaningless from the perspective of revenue collection,” he added. 

Echoing the same, Executive Director of the South Asian Network on Economic Modeling (SANEM) Dr Selim Raihan said: "There are initiatives which can be counterproductive. 

"Investment amnesty proposed for black money, without any punitive measures, and political patronage and poor monitoring can make this initiative unsuccessful."

Earlier, Debapriya Bhattacharya, a distinguished fellow of the Centre for Policy Dialogue (CPD) said: “Allowing black money whitening in the upcoming budget would be a departure from Awami League's electoral pledge."

The opportunity to legalize black money in the industrial sector was first introduced in the 2003-04 fiscal year, 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.

According to an estimate by Bangladesh Economic Association (BEA), Bangladesh has around Tk5 trillion to Tk7 trillion of black money.

Read the full budget speech for FY20 here.

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