Not individuals, companies should get opportunity to whiten black money: FBCCI

The Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) wants the opportunity to regularise undisclosed income and assets to be provided exclusively to companies, not individuals.

The trade body, in a 12-point proposal sent to the finance minister today, wrote, "In the Finance Bill-2024, the opportunity to regularise undisclosed money through a 15% tax should be limited to companies." 

However, it suggested that companies should only be eligible for this facility if their income is legal.

"Income from illegal sources should not be allowed the opportunity. This will preserve the transparency and fairness of the tax policy and ensure a level playing field for tax-paying organisations and individuals," said the proposal.

A copy of the letter, signed by FBCCI President Mahbubul Alam, has been sent to top officials of the National Board of Revenue (NBR), and Finance Division. The Business Standard obtained a soft copy of the letter.

In previous financial years, individual taxpayers were allowed to regularise undisclosed income by paying some tax. For the first time in the FY25 budget, this opportunity has been extended to corporate taxpayers. 

Under the proposed provision, undisclosed assets can be legalised by depositing it in a bank or investing it anywhere after paying 15% tax with no questions asked about its source.

At the post-budget press conference on 7 June, NBR Chairman Abu Hena Md Rahmatul Muneem said the decision was made in response to requests from various business organisations.

"We had information that some traders could not display all their assets due to audit related issues. That is why we have made this proposal," said the NBR chairman. 

He said the matter would be discussed in the parliament and the lawmakers will take a decision on it.

However, the proposal has been met with criticism from various quarters, including economists and think tanks, who argue that the opportunity will discourage genuine taxpayers and will increase the trend of illegal income. 

New formula for cashless transactions

To foster a cashless society, the government has proposed a 2.5% reduction in corporate tax rates for any income year. Transactions exceeding Tk5 lakh and annual expenditures or investments over Tk36 lakh must be conducted through banking channels. 

However, the FBCCI in its proposal suggested allowing up to 30% of sales transactions in cash even under these conditions, proposing a gradual reduction in cash transactions over time to align with company sales rates.

Relax conditions for for IT sector

According to the Finance Bill-2024, Information Technology Enabled Services (ITES) must conduct 100% cashless transactions to qualify for tax exemption.

In this regard, the FBCCI noted  that given the current limitations of banking infrastructure and digital transaction facilities, achieving 100% cashless transactions will pose significant challenges for many businesses, especially small-scale enterprises. 

Therefore, the condition could be eased initially and phased in gradually over the next few years. This approach will enable these businesses to benefit from tax exemptions, said the trade body.

The FBCCI's other demands include reducing disallowed business expenses, adopting risk-based audits for taxpayer returns, issuing audit guidelines to prevent taxpayer harassment, implementing a prospective tax system, imposing 7% tax at source on service supplies. 

The trade body also proposed bringing government funds, provident funds, gratuity, and other future funds under income tax to eliminate discrimination between government and private employees.