The National Board of Revenue (NBR) in Bangladesh has officially abolished the long-controversial provision that allowed individuals and companies to legalize undisclosed income—commonly referred to as ‘black money’—by paying a reduced tax rate of 15 percent.
The black money whitening provision had been widely criticized for being discriminatory. Under the previous system, a maximum income tax rate of 25 percent was applicable to individuals, with additional wealth tax surcharges imposed on taxpayers possessing net assets exceeding Tk 40 million.
The highest surcharge rate reached up to 35 percent. In comparison, the 15 percent tax rate offered for whitening black money was seen as an unfair advantage to those with undisclosed income, undermining the principle of tax fairness and penalizing honest taxpayers who complied with standard tax regulations.
In its notification, the NBR explicitly described the provision as ‘discriminatory’ and a violation of a fair tax system. The abolishment of the black money whitening scheme follows a recent declaration by the interim government, which indicated its intention to remove the provision. The decision was reportedly influenced by an advisory committee led by Nobel laureate Professor Muhammad Yunus.
Abdur Rahman Khan, the NBR Chairman, emphasized the detrimental impact of the provision, stating that it not only discouraged law-abiding taxpayers but also weakened the overall tax administration.
The provision had been in place for several decades, with successive governments offering the money-whitening facility in various forms. Since Bangladesh’s independence in 1971, the scheme had been introduced at least 22 times, but it generally failed to achieve the desired economic outcomes.
Critics argued that the measure did little to enhance cash flow in the economy and often served as a loophole for those seeking to legitimize illicit income with minimal scrutiny.
Over the years, the NBR’s data reveals that nearly Tk 455.22 billion was legalized through the scheme between 1972 and 2022, generating approximately Tk 46.41 billion in taxes. Despite these figures, the response to the scheme was often lukewarm, with limited participation from the public.
Notably, during the fiscal year 2020-21, a record Tk 206 billion was whitened when the government offered full amnesty to black money holders, yielding Tk 20.64 billion in tax revenue.
