The Institute of Chartered Accountants of Bangladesh (ICAB) has voiced concerns regarding the proposed budget’s provision to legalize black money with a 15% tax. According to ICAB, the budget fails to differentiate between legitimate and illegitimate income.
During a post-budget press conference held at the ICAB office in Dhaka, Md Humayan Kabir, a former ICAB president, emphasized the need for the budget to make this distinction clear.
Mohammed Forkan Uddin, the current ICAB president, while refraining from commenting on the benefits of legalizing undisclosed money at the individual level, argued that such provisions could be advantageous for companies. He noted that prior to 2020, many companies submitted multiple financial statements. The introduction of an online document verification system in 2020 exposed inconsistencies and irregularities in previous financial statements, limiting companies’ ability to display many assets. Forkan mentioned that the government had been considering granting amnesty to companies in this context.
In a separate event, Fahim Mashroor, a former president of the Bangladesh Association of Software and Information Services (BASIS), criticized the proposal to legalize undisclosed money. Speaking at the “Reflections of Budget 2024-25” program, co-organized by Policy Exchange Bangladesh and Snehasish Mahmud and Company Advisory Services, Mashroor highlighted the disparity in tax rates. He noted that while he faced an effective tax rate exceeding 40%, others could legalize their wealth at a mere 15% tax rate. Mashroor expressed concern over potential capital flight, arguing that such policies could encourage wealth to be moved out of the country despite short-term revenue gains for the government.
During the same event, M Masrur Reaz, chairman of Policy Exchange Bangladesh, presided over the program, and Snehasish Barua, director of SMAC Advisory Services, presented the keynote paper.
Meanwhile, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President Mahbubul Alam, in a briefing, stated that dishonest traders should not be favored. He emphasized that undisclosed money should not be used for criminal activities and called for encouragement of honest traders who have been consistent taxpayers. Alam acknowledged that some taxpayers might have inadvertently failed to disclose all their income and advocated for giving them a chance to rectify this.
Addressing the issue of tax equity, Bangladesh Institute of Development Studies (BIDS) Director General Binayak Sen criticized the flat 15% tax rate for legalizing undisclosed income and assets. Speaking at a discussion on the “National Budget for 2024-2025 and the Medium-Term Outlook on the Bangladesh Economy” held at the BIDS office in Dhaka, Sen argued that tax rates should be proportional to the amount of undisclosed income or assets. He recognized that legitimate income might be undisclosed for various reasons and supported providing an opportunity to disclose such income. However, Sen opposed an absolute tax exemption or a fixed rate for disclosing undisclosed income, suggesting that the tax rate should range from 10% to 30% depending on the amount disclosed.
Sen also pointed out that unofficial transactions, particularly in sectors like land, could benefit from a provision to disclose such money during regular tax returns. He reiterated that the tax rate should be variable based on the amount of undisclosed money.
