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No more money whitening

Tax ombudsman next year, says Saifur

Staff Correspondent
The provision of whitening black money will be discontinued from next fiscal year, Finance Minister M Saifur Rahman yesterday said.
He also said a tax ombudsman will be appointed in the next fiscal year and a law will be passed in this regard in the budget session of parliament. The ombudsman will have offices in all districts to deal with harassment of taxpayers.
"We cannot allow legalisation of haram (illegal) money every year,"
Saifur commented about black money at a pre-budget consultative meeting of the National Board of Revenue (NBR).
"This does not uphold morality or honesty," the finance minister said in reference to the existing five different provisions for converting black money into white.
"A few years ago, the opportunity to whiten black money was given for investment in share market and industry. This scope will expire this fiscal year as this contradicts the Anti-money Laundering Act," he added.
However, chamber leaders led by Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) President Abdul Awal Mintoo urged the government to extend this opportunity.
"There can be both good and bad sides of black money. We may offer the money whitening scope after 2025 years. But we cannot make such offers every year," Saifur replied.
"On one hand, we are fighting against money laundering under the Anti-Money Laundering Act and on the other, we support whitening of black money. This is selfcontradictory," he added.
"Internationally, there has been a lot of regulations such as antiterrorism and anti-money laundering laws. In such a context, if we allow ill-gotten money to be whitened, we will defy our international obligations," Saifur argued.
Although many economists believe there may be more than Tk 50,000 crore in black money in the economy, in the last three years only about Tk 1,800 crore have been whitened, according to an NBR report. Economists argue that the provision to whiten money is an injustice to honest taxpayers.
President of the Bangladesh Indenting Association (BIA) Moazzem Hossain alleged in the meeting that there are more than 100,000 foreigners doing business without paying taxes.
"We do our business by paying taxes. But there are many foreign businessmen who do not," he added.
Citing statistics of the Board of Investment (BoI), he said there are more than 100,000 foreign businessmen who mostly reside in different hotels and guesthouses.
Many of them are involved in the indenting business, which they operate through computer networks, making their business activities undetectable to the government, Hossain alleged.
In response, Saifur urged the businessmen to help the govern-
ment detect them.
Saifur pointed out that the commerce ministry and not the finance deals with foreign businessmen.
"I cannot interfere in the commerce ministry's affairs," he quipped. "But I will talk to the commerce ministry regarding this matter and take necessary actions."
The businessmen placed 322 proposals on Vat, tax and import duty at the meeting.
Many of them criticised the bonded warehouse facility, saying that a significant portion of the fabrics imported duty-free through such warehouses slips into the local market, hurting the local textile industries.
"I have heard such allegations before. Deep at night, they smuggle the fabrics," Saifur noted. Without mentioning his opinion on the matter, he told the businessmen, "You launch a movement against such a practice."
A businessman mentioned NBR harassment and said: "The way the NBR officials treat us, it seems that we are criminals and they are policemen."
Saifur replied, "They not only harass you, but they do the same with me too. If you have specific allegations we can take actions."
Responding to the businessmen's pleas to reduce taxes, Saifur said, "If we cut taxes, where do we get the money? Shall I just print notes? Bangladesh has the world's lowest tax-GDP ratio.
"For the sake of your business, we need infrastructure and for that we need money," he continued. "To transport goods from Chittagong to Dhaka, we need roads. Construction of each mile of road needs between Tk 12 crore to Tk 15 crore. Besides, there are other infrastructure issues such as gas or power to care of. So without paying tax, you cannot expect these facilities."
"I shall try to meet your demands, which are acceptable," Saifur said.