Black money legalising offers exit route for undisclosed amounts, says NBR chairman

National Board of Revenue (NBR) Chairman Abdur Rahman Khan has said the proposed budget for the financial year 2025-26 leaves the opportunity to whiten black money on a limited scale to provide an “exit route” for those interested in legalising money undisclosed for different reasons.

Finance Advisor Salehuddin Ahmed’s Tk 7.9 trillion budget proposal offers the option legalising black money, or undisclosed income, through investing in the real estate sector, though the tax penalty for doing so has been increased severalfold.

Speaking at a post-budget press briefing at Dhaka’s Osmani Memorial Auditorium on Tuesday, Rahman said the window to legalise untaxed money in the budget during the interim government’s tenure was “not a good thing” or in line with the “anti-discrimination spirit” of the nation now.

He said, “We are not saying that we are doing a very good thing by allowing whitening black money.

“We repealed the previous provision of 15 percent tax on black money, which was to be used to whiten black money after the new government took charge. We did not extend another provision for black money, set to expire on Jun 30.

“It allowed someone who bought land or a flat to pay a little more tax without being questioned by the government or other authorities. We did not extend that either.”

“If you bought a flat or land and paid a certain amount of tax, the NBR would not question it any more. We rationalised that a little, dividing it into two parts."

Rahman explained, “Those who build houses on their land are often bringing in money from abroad. Sometimes they do not bring money through legitimate channels (banks).

“For different reasons, this money remains undisclosed, so if they have an exit route, we have said that we will accept it if they declare it by paying taxes.”

He, however, added that it did not mean that any other organisation could not ask any questions about this.

“Other organisations can also ask questions. We have also doubled this amount. Now you have to pay double the amount of what was required to be paid before.”

Currently, black money can also be legalised by investing Tk 6,000 per square metre in buildings or apartments with an area of 200 square metres in the Gulshan Model Town, Banani, Baridhara, Motijheel Commercial Area and Dilkusha Commercial Area in Dhaka.

In order to purchase such flats, buildings or apartments using black money will mean spending Tk 1,800 per square foot in the coming fiscal year.

This means the tax has been increased by up to 384 percent and could go up to Tk 19,377 per square metre.

Thus, the tax rate has been increased in each case, depending on the size of the apartment or building.

Since the interim government took office, it has repeatedly stated that it will not allow black money or undeclared income to be whitened through investments.

In September, they abolished the opportunity to launder black money. However, since they did not mention the abolition of the opportunity to launder through investment in the housing sector, i.e. flats or buildings, this provision remained in place.

The government has now decided to hike the tax rate substantially but has not actually closed the loophole.

Currently, black money can also be legalised by investing Tk 4,000 per square meter in buildings or apartments with a plinth area of not more than 200 square metres in the Gulshan Model Town, Banani, Baridhara, Motijheel Commercial Area and Dilkusha Commercial Area in Dhaka.

In order to purchase such flats, buildings or apartments using black money will mean spending Tk 1,800 per square foot in the coming fiscal year. This means the tax has been increased by up to 384 percent and could go up to Tk 19,377 per square metre.