Call for allowing black money investment in real estate at 10% tax for up to 10 years

The Real Estate and Housing Association of Bangladesh (REHAB) has proposed to allow black money investment in the housing sector at a 10% tax with no questions asked.

The association demanded the facility for the next five to ten years during the pre-budget discussion held at the Revenue Building in Agargaon area of the capital yesterday.

Presenting the REHAB's proposals at the discussion, its Vice President Shohel Rana said a lot of money is being laundered abroad from the country these days due to the opportunity to buy second homes in different countries. Moreover, foreign governments ask no questions in such cases.

"If an opportunity [to invest black money] is provided in the country, these investors will come under the tax net in future," he said.

Regarding the REHAB's demand, National Board of Revenue (NBR) Chairman Abu Hena Md Rahmatul Muneem said providing such facilities every year will only perpetuate generation of black money.

REHAB has also proposed reducing the registration fee in the housing sector from the existing 12.5% to 7%, fixing the tax rate at 3.5% to strengthen the secondary market in this sector, reducing VAT by one-third, and cutting the source tax of the land owner from 15% to 4%.

At the meeting, the Bangladesh Reconditioned Vehicle Importers and Dealers Association (Barvida) called for increasing the depreciation rate for importing reconditioned vehicles, introducing specific taxation provisions, reducing duty on SUVs or Jeeps, withdrawing the supplementary duty on electric vehicles, withdrawing the existing 20% supplementary duty on microbuses used for public transport and withdrawing import duty on vehicles used in public transport.

In the FY21, the government allowed unconditional investment of black money in any sector including housing for only a 10% tax. It also made a legal provision saying that the authorities cannot raise questions about the source of those investments.

As a result, 11,839 people whitened about Tk20,500 crore in FY21 – the highest in a single year in the country's history.

In the next fiscal year, the government continued the facility in a limited way.

In the face of heavy criticism from different quarters, the government withdrew this special facility in FY23 and allowed asking questions regarding sources of the money used in these investments. However, undisclosed money can still be turned white in current times with applicable tax (up to 25% tax and 10% fine).

Currently, individuals pay up to 25% tax on their income.

Representatives of Bangladesh Tanners Association, Bangladesh Ceramic Manufacturers and Exporters Association, Bangladesh Finished Leather, Leathergoods and Footwear Exporters' Association also presented their proposals at the meeting.

Without increasing capacity, country to face bigger crisis in 2026

At the pre-budget discussion, the NBR chairman said graduating from its status as a Least Developed Country by 2026 is a challenge for Bangladesh and the country will be in a situation worse than present if it cannot increase its capacity significantly by that time.

"For this reason, it is not certain whether we can give the existing benefits to importers or local industries for a long time," he said.

Addressing the local industry owners, he said, "There is very little time. Please increase your capacity. A culture of evading taxes cannot last forever.

He further said, "Misuse of bond facility is a big challenge. It is difficult to extend the facility if its misuse cannot be stopped. However, if the bond management is automated, this facility can be quickly given to other sectors."