Tax amnesty for whom, exactly?

FE Team | Published: May 23, 2026 19:47:55

The government is reportedly on the verge of offering a special tax amnesty that would allow non-resident Bangladeshis to invest undisclosed income in select sectors without facing any scrutiny from revenue authorities or other agencies. Officials argue that the initiative could encourage overseas Bangladeshis to repatriate funds through formal channels and help channel idle capital into productive sectors. These justifications, however, crumble under even the most basic examination of existing law and recent economic data. Under the current Income Tax Act, any income earned abroad by a Bangladeshi natural person taxpayer and brought into Bangladesh through formal remittance channels is entirely tax-exempt. Not only that, the government provides a 2.5 per cent cash incentive on remittances transferred through legal channels, a policy specifically designed to encourage expatriates to use the banking system rather than informal routes. In April alone this year, Bangladeshi expatriates sent home a record $3.12 billion without facing any legal difficulty, demonstrating beyond any reasonable doubt that the existing framework is not a barrier to remittances. The question that naturally arises, then, is for whom exactly this amnesty is being designed, because the legitimate expatriate worker sending money home already enjoys exemptions and incentives that make formal channels both safe and financially rewarding.
If the expatriates already enjoy safe and rewarding channels, the necessity for this amnesty must stem from a different demographic entirely. There are even allegations that unscrupulous individuals already exploit the existing framework by sending money out through illegal channels and bringing it back as legitimate remittance to whiten illicit wealth while claiming cash incentives. Given that mechanisms already exist to facilitate legitimate transfers of funds, and are also misused through circumvention of rules, the proposition of an additional amnesty inevitably points toward a far more concerning set of beneficiaries. This is public knowledge that there are some notorious individuals who have already siphoned billions, if not trillions, out of the country to establish offshore business empires and acquire foreign properties. A blanket amnesty will risk providing them precisely the legal cover they need to reintegrate stolen capital without facing prosecution. The government must weigh this reality seriously, because a policy whose most probable beneficiaries are the very people the state should be prosecuting is far more corrosive to institutional credibility than any short-term revenue gain could justify.
Alongside this deeply problematic amnesty proposal, the government is also considering a reduction in the advance income tax rate on imports of raw materials by commercial importers holding import registration certificates. The current advance tax stands at 5 per cent, which is adjustable against final tax liabilities. The NBR is already staring at a monumental revenue shortfall exceeding Tk 1.04 trillion during the first 10 months of the current fiscal year. At a time when the government should be taking initiatives to increase revenue mobilisation, reducing advance tax collection is bound to negatively impact the overall revenue picture even further.
Policymakers acknowledge that within the prevailing tax culture of Bangladesh, advance taxes and deductions at source constitute a substantial share of actual revenue collection. This heavy reliance on deductions at source inadvertently fosters a widespread, albeit illegal and unethical, practice where many taxpayers calculate their declared income based purely on the taxes they have already paid. However, businesses very often struggle to secure cash refunds if the AIT is paid in excess of their final liability. This prompts them to pass the tax money on to the consumers. There is no denying that the case of AIT is a tricky one. Under the prevailing circumstances, the government will have to generate more revenue while finding solution to problems the businesses have been facing for long.