NBR mulls plugging tax loopholes related to fisheries income

The National Board of Revenue (NBR) is considering closing tax loopholes related to fisheries income, as some individuals have allegedly been legalising black money by reporting income from the sector, which offers a significantly reduced tax rate.

Currently, the maximum tax rate for individuals is 30%, but income from this sector is taxed highest at 15%. Experts believe that certain politicians, bureaucrats, and businessmen have been using this loophole to whiten significant amounts of illegally earned money this way.

A senior NBR official, on the condition of anonymity, told TBS that efforts are underway to amend the reduced tax rate for income from the fisheries sector. "We aim to provide some benefits to legitimate fish farmers without completely eliminating this facility," the official said. "A Statutory Regulatory Order (SRO) order in this regard may be issued soon."

However, the official indicated that, even if the order is issued, it is likely to apply to the income of the 2025-26 fiscal year.

In addition, he said that some additional tax benefits granted through various SROs to certain groups or companies outside the fisheries sector may also be revoked.

Experts welcome the move 

Experts have welcomed this move. Dr Syed Md Aminul Karim, a former NBR member for income tax policy, told TBS, "Using the fisheries sector to show income is essentially a way to whiten black money and cancelling this provision is a step in the right direction."

"I haven't seen evidence of real fishery owners benefiting from this facility. Instead, it has primarily been exploited by politicians, businesspeople, and others to whiten illegally earned money by paying reduced taxes. This not only results in revenue loss for the government but also incentivizes illegal earnings," he said.

Emphasising the need for careful consideration to ensure genuine fishery owners are not adversely affected, Aminul Karim suggested that small-scale fish farmers operating within specific income thresholds or on limited land could retain some benefits under this scheme.

According to NBR data, income from the fisheries sector is currently tax-exempt for the first Tk10 lakh. The tax rate is 5% on the next Tk10 lakh, 10% on the following Tk10 lakh, and capped at a maximum of 15% for income beyond Tk30 lakh. By contrast, ordinary individual taxpayers face roughly double tax rates.

NBR officials told TBS that while there was an initiative to raise the tax rate on fisheries sector income during the previous Awami League government, the proposal did not receive approval from the top level of the administration, forcing the NBR to abandon the effort.

Dr Iftekharuzzaman, executive director of Transparency International Bangladesh (TIB), told TBS that the provision had long been a means to legitimise money obtained through illegal means. "I welcome the move to abolish this benefit," he said.

However, he cautioned against extreme measures, comparing it to "chopping off the head to cure a headache." He emphasised the need for thoughtful consideration to address the concerns of individuals genuinely earning from the fisheries sector.

Businesses express concern 

Some business leaders have expressed disagreement with the NBR's new initiative.

Abul Kasem Khan, former president of the Dhaka Chamber of Commerce and Industry (DCCI), told TBS, "Those abusing this tax facility should be identified and punished, but it would be unfair to cancel the benefit for genuine businessmen."

"The fisheries sector is vital for the country, meeting both economic and nutritional demands. If the reduced tax facility is withdrawn and taxes are raised significantly, it could negatively impact the sector's growth," he added.

The NBR could not provide statistics on the total amount of income declared under the fisheries sector, but it was reported that some individuals have shown incomes in the crores or even hundreds of crores of taka from this sector for reduced tax facility.