Record Tk20,500cr black money whitened in FY21

A total of 11,839 people whitened about Tk20,500 crore in the just-concluded fiscal year – the highest in the country's history in a single year.

Of the amount, Tk16,830 crore of cash, which was kept in banks or cash as a temporary provision of the National Board of Revenue, has been legalised by 7,055 untaxed money holders.

The rest of the money was invested in land, flats or the stock market. The National Board of Revenue (NBR) received Tk2,064 crore in revenue from those investments. 

Earlier in the 2007-2008 and 2008-2009 fiscal years – during the regime of the military-backed caretaker government – Tk9,682.99 crore of black money was whitened, which was the highest amount in Bangladesh's history.

The government has provided the opportunity to invest money earned from undisclosed sources in various sectors, including the stock market and real estate, to overcome the fragile state of the economy brought about by the pandemic.

Economist and former NBR chairman Dr Abdul Majid said, "Sending money abroad became unsafe because of Covid-19.  On the other hand, the hundi system has remained closed too. As a result, people have kept their illegal earnings in banks."

NBR officials said an opportunity was given to whiten money by investing in the stock market and by parking as cash, bank deposits and savings certificates with only a 10% tax payment.

Apart from these, the investment of undisclosed money was allowed in the purchase of land and flats with the tax rate determined according to location and size. And the opportunity has been utilised the most in the case of the deposited money.

People from all professions, including doctors, engineers, and businessmen, have whitened their money during the time.

According to NBR sources, 4,518 people have whitened money by buying land and flats at the end of June. And, 268 have invested untaxed money in the stock market.

Since the independence of Bangladesh, most governments have provided the opportunity to whiten black money, but the initiatives have mostly failed to get any serious attention, as various government agencies were allowed to ask a question about sources of undisclosed money.

Therefore, the NBR amended the law in 2020 so that no one could seek information about the source of the black money during or after the whitening process.

Individual taxpayers whitened undisclosed money amounting to Tk450 crore in the fiscal 2015-2016, but there is no data after that, said NBR sources.

However, the NBR added that Tk9,682.99 crore was whitened during the caretaker government era, while this amount is Tk13,372 crore during the 44 years between 1972 and 2016. The government also earned revenue amounting to Tk1, 454 crore from this process.

Economists think that owners of black money have been encouraged as the opportunity has been given on a larger scale and at a low tax rate.

In addition, the possibility of money laundering abroad has become limited due to the closure of all communications amid the Covid-19 pandemic, which might be another reason for whitening money.

Money whitening scope continues

Undisclosed money holders have again got the opportunity to legalise their dirty money without facing any question about sources of income through investments in almost all sectors for the current fiscal year.

Black money invested in new factories can now be whitened by paying only a flat 10% tax.

The government has offered a special package allowing investment of untaxed money in the manufacturing industry in FY22 on the condition of paying only a 10% tax.

Besides, investment of such money is allowed in the stock market subject to paying 25% regular tax plus a 5% penalty. The undisclosed money can also be parked as cash, bank deposits, and savings instruments on similar conditions, according to the Finance Act.

The black money owners are now required to pay Tk200-Tk6,000 per square metre to legalise investments in apartments and land.