NBR boss defends opportunity to legalise black money with 15pc property tax

The National Board of Revenue chairman has leapt to the defence of black money whitening provision, saying the measure aims to assist those who fail to report wealth due to “unawareness or complexities”.

Abu Hena Md Rahmatul Muneem said those who hold illegal assets typically refrain from investing the funds into the national economy.

The proposed budget for the fiscal year 2024-25 includes a clause reintroducing the whitening of investments, such as black money, undisclosed assets, land, flats, and shares, by paying a 15 per cent tax.

Criticising the decision, the Centre for Policy Dialogue or CPD said that offering a 15 per cent tax rate to legalise black money is neither morally nor economically justifiable, especially when the maximum tax rate for individuals is set at 30 per cent.

The think tank argued that this penalises regular taxpayers.

Finance Minister Abul Hassan Mahmood Ali asked NBR Chairman Muneem to respond to queries as reporters raised the issue at a Friday post-budget press conference at Osmani Memorial Auditorium in Dhaka.

Muneem explained, “When such amnesty is given, it’s often perceived as a way to convert black money into white. However, this particular amnesty is aimed at addressing undisclosed assets that exist for various reasons.”

He emphasised that many countries provide similar opportunities to declare assets that were previously unreported for unavoidable circumstances.

This measure, he claimed, was in response to demands from the business community and the common people, aiming to facilitate compliance and prevent money laundering.

Muneem said that black money typically does not benefit the national economy and is often spent abroad.

The government hopes to bring this money into the mainstream economy, encouraging individuals to declare their undisclosed assets and comply with tax regulations.

The proposed budget stipulates that individuals who pay a 15 per cent tax on their undisclosed assets between Jul 1, 2024, and Jun 30, 2025, will not face any questions from tax authorities.

This provision also applies to the legalisation of land, flats, and apartments by paying the specified taxes according to the area.

After a four-year pause, the controversial provision found its way back in the budget for FY 2024-25 worth nearly Tk 7.97 trillion unveiled in parliament on Thursday.

In the fiscal year 2020-2021, the government had previously allowed the legalisation of undisclosed income with a 10 per cent tax.

However, the new proposal reinstates this opportunity without the prior conditions, aiming to correct errors in income tax returns and increase economic activity in the private sector.

Finance Minister Ali said on Thursday that the recent introduction of a Data Verification System had inadvertently made it more challenging for companies to legally disclose their income and assets.

He also acknowledged that discrepancies in disclosures of acquired assets could arise due to unavoidable issues, including errors made by taxpayers while filing returns.

Ali emphasised the need to maintain the country’s economic dynamism amidst the ongoing global crisis in his budget address.

“To ensure adequate government expenditure and stimulate effective demand in the economy, we must increase revenue and keep private sector economic activities dynamic,” he said.

“In this regard, I propose to introduce a section on tax incentives in the Income Tax Act, allowing taxpayers to rectify errors in their income tax returns and channel more money into the mainstream economy,” he added.