Individual claims Tk730cr as remittance; NBR suspects money laundering

The National Board of Revenue (NBR) suspects that an individual has brought in "laundered money" from abroad and is now attempting to present it as remittance to avail of tax exemptions.

During a discussion today, NBR Chairman Abdur Rahman Khan said the law provides a facility ensuring expatriates do not have to pay taxes when sending their hard-earned money home.

However, citing an example of the possible misuse of this facility, he said, "A person took advantage of this provision and brought in Tk730 crore, claiming to be a wage earner, and asserted that the amount is tax-exempt."  

Khan said the reason the Gini coefficient – which measures income inequality – is moving in the wrong direction is due to such instances. "Either we fail to detect them or deliberately ignore them," he added.  

He pointed out that while the provision provides benefits, some individuals are exploiting it to evade taxes.  

When journalists at the event asked about the identity of the individual, the NBR chairman declined to disclose it. "You will certainly come to know it when we take action," he added.  

According to the country's existing laws, remittances sent home by expatriates are tax-free. Additionally, if the money is sent through official banking channels, a 2.5% cash incentive is provided.  

However, NBR officials believe it is unlikely that an individual could legally earn such a large sum abroad. They suspect this is an attempt to legalise laundered money while enjoying income tax benefits.  

A commissioner with expertise in income tax law at the NBR, speaking to The Business Standard on condition of anonymity, explained, "Remittances are tax-free by law, but the money must be legitimately earned abroad by the individual."  

He said if the income tax department has reason to doubt the origin of the money, the wage earner may be required to provide proof of income. If he fails to do so, the income will be subject to taxation at the applicable rate, he added.  

"We suspect that this money was originally laundered out of the country. However, the relevant department will determine the truth after conducting a thorough investigation," he said.  

During the meeting held at the NBR headquarters in the capital, Abdur Rahman Khan also highlighted the lack of good governance across all sectors.  

He said if there are no consequences for failing to file tax returns, then those who do so regularly are "being treated as fools". Out of 1.13 crore Taxpayer Identification Number (TIN) holders, nearly 80 lakh do not file returns.  

"So, the 40 lakh who do should be asking, 'Why are we filing returns?' This indicates that we are not enforcing tax regulations effectively at the field level," he added.  

The discussion, titled Economic Discussion: Revenue Management and the Media, was organised by the BCS Taxation Association.  

During the meeting, Khan stressed the importance of integrating bank account information with the NBR to ensure proper tax deductions on deposited funds. He also discussed the need for interoperability with CDBL information.  

While speaking, Economic Reporters Forum President Doulot Akter Mala stressed the importance of data availability for quality reporting on revenue issues. 

Among others, BCS Taxation Association President Mutasim Billah Faruqui and Secretary General Syed Mohidul Hasan participated in the discussion. NBR's LTU Commissioner Iqtiaruddin Mamun presented the keynote paper.