Govt to scrap black money whitening scheme

The interim government has decided to abolish the controversial black money whitening facility, which currently permits individuals to legalise undeclared income by paying a 15% tax.

The decision was made during a meeting of the interim government's Advisory Council at the state guest house Jamuna on Thursday (29 August), Syeda Rizwana Hasan, the adviser for environment, forest, and climate change, told reporters after the meeting.

However, sources within the National Board of Revenue (NBR) told TBS that some aspects of the scheme may not be fully abolished.

The option to legalise undisclosed securities, cash, bank deposits, and other financial instruments may be discontinued but the scope to legalise real estate properties – establishments, flats, apartments, and land – by paying the prescribed income tax is expected to continue.

Additionally, the existing provision for legalising undisclosed amounts by paying regular taxes and existing penalties will likely remain in effect.

Sources said the provision to question the source of money, which was removed in the FY25 budget, may be reinstated.

Furthermore, individuals who have evaded taxes or are facing criminal charges will not be able to legalise illicit money.

The recently ousted Awami League government permitted the legalisation of black money with a 15% tax in the FY25 budget. 

This decision faced intense public criticism, as legitimate taxpayers are subject to income tax rates of up to 30% plus an additional surcharge. 

Recently, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the country's apex trade body, has also called for the cancellation of this controversial scheme.

In response, the interim government, led by Chief Adviser Dr Yunus, has moved to scrap the facility.

Economists welcome the move

Economists have praised the interim government's approach to dealing with the controversial facility.

Mohammad Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), told TBS, "Ending the facility for legalising black money is a positive step, as it was highly unjust.

"The availability of this facility has increased injustice, inequality, and corruption in society, while also undermining the government's policy credibility."

Razzaque also suggested that the government should conduct thorough investigations into black money holders.

Abul Kasem Khan, former president of the Dhaka Chamber of Commerce and Industry (DCCI), also praised the initiative.

He said, "This decision reflects the current government's commitment to enforcing compliance. Providing such a special facility is an insult to honest taxpayers and businessmen."

Emphasising the need to address the black money problem, Kasem added, "The source [of black money] must be eliminated. Additionally, the reasons behind the concealment of funds should also be addressed."