The government may offer a special tax amnesty allowing non-resident Bangladeshis (NRBs) to invest undisclosed income in several sectors back home facing no questions from revenue authorities or other agencies.
Under a proposed arrangement, already approved at government's high level, NRBs can invest their undeclared incomes in select sectors, excepting real estate, in the upcoming financial year, officials say.
The budget for the fiscal year 2026-27 may also provide for a reduction in the Advance Income Tax (AIT) rate on imports of raw materials by commercial importers holding Import Registration Certificates (IRC) in an effort to lower the cost of doing business.
Currently, import-stage AIT stands at 5.0 per cent, which is adjustable against final tax liabilities.
Manufacturers have long demanded cutbacks on the rate, arguing that adjustment of the tax paid at the import stage requires businesses to earn profits of around 29.09 per cent.
They also describe the mechanism as a form of double taxation because it imposes a two-tier tax burden on corporate entities.
In a study paper, Snehasish Barua, fellow member of the Institute of Chartered Accountants of Bangladesh (ICAB) and partner at SMAC Advisory Services Ltd, says the existing system increases business costs and creates pressure on cash flow.
Officials say the government is also considering a predictable tax regime for the next five years for some investment-intensive sectors, offering tax-holiday facilities.
Tax officials say the proposed measures are likely to be incorporated into the Finance Bill 2026 to be placed in parliament alongside the national budget.
Regarding the amnesty facility, officials say the government has decided to move ahead after many NRBs expressed difficulties in bringing money back home amid growing global uncertainty and Mideast war.
A senior tax official says many expatriates are interested in investing in Bangladesh, but their overseas earnings are often not properly reflected in their tax files because they do not stay in the country for long.
"We plan to allow NRBs to bring back their money through banking channels for investment in sectors such as solar energy and other employment-intensive industries," he told The Financial Express.
However, undeclared income repatriated under the scheme will not be eligible for investment in the real-estate sector.
The official mentions that many countries are offering incentives and tax breaks to attract overseas investments, and Bangladesh risks losing potential inflows if it fails to introduce competitive facilities.
"Bangladesh can attract these funds by offering an amnesty for income that NRBs could not disclose in their tax files at home or abroad," he further explains.
Under the existing Income Tax Act, NRBs are required to pay taxes on income earned in Bangladesh. However, they are also required to disclose wealth earned abroad in their tax returns.
Tax officials say all citizens of Bangladesh having taxable income or falls in the category of mandatory tax-return-submission criteria are required to submit tax return as per income-tax law.
Noted economist Prof Mustafizur Rahman expresses doubts about the effectiveness of the measure, saying that it may not attract any significant inflows because expatriates can already send remittances through formal channels enjoying tax exemptions.
Professor Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), notes that a similar facility allowing offshore asset repatriation at a tax rate of 7.0 per cent had failed to attract NRBs in the past.
In FY2023, the then Awami League government scrapped a yearlong amnesty programme that had allowed Bangladeshi nationals to get legalised offshore assets by paying 7.0-percent tax as no one availed the facility.
The scheme had allowed repatriation of cash, bank deposits, banknotes, convertible securities and other financial instruments.
However, the initiative drew strong criticism from various quarters.
Tax officials argue that the latest proposal could help bring back laundered money into the formal economy.
In 2020, the government offered an opportunity to legalise undisclosed income by paying a flat 10-percent tax.
The highest response to such amnesty measures came in FY2021, when around Tk 120 billion entered the mainstream economy, generating Tk 19.81 billion in taxes.
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