Tax officials will be able to investigate undisclosed expenditures of individual taxpayers from any period in the past, even decades old, under a new provision proposed in the Finance Bill 2026.
The move marks a significant departure from the existing tax framework, which generally prevents the reopening of tax files beyond six corresponding tax years.
Individual taxpayers are also required to preserve income and expenditure records for only five years.
Tax experts and business leaders fear the proposed measure could substantially expand the discretionary powers of tax officials and expose compliant taxpayers to harassment.
Under the proposed provision, if tax authorities discover unexplained income, expenditure or assets that fall outside the six-year assessment window, the amount may be deemed to have arisen in the oldest year still open for assessment and taxed accordingly.
Former member of the National Board of Revenue (NBR) Apurba Kanti Das said the proposal contradicts existing limitations on tax assessments.
"Previously, tax officials could go beyond the six-year limit only when they possessed specific evidence of concealed income or expenditure," he said.
"The new provision appears to allow such inquiries without requiring concrete evidence."
Tax expert Snehasish Barua described the proposal as a "time machine" in a social media post.
"If an individual has undisclosed income, expenses or hidden assets dating beyond the six-year look-back period, the law will treat those amounts as having arisen in the sixth assessment year for tax purposes," he explained.
Barua argued that such a provision should be introduced only after taxpayers are given an opportunity to regularise past omissions through a general disclosure scheme.
For example, if tax authorities uncover an undisclosed expenditure of Tk 1.0 million made eight years ago, they would be empowered to assess and tax that amount within the current assessment framework.
Tax practitioners argue that the proposal undermines the principle of tax certainty.
They question the rationale for maintaining a six-year limitation period if expenditures can effectively be assessed indefinitely.
They also warn that taxpayers could face substantial tax demands, along with penalties, for transactions made many years ago despite legal requirements to retain records for only five years.
Business leaders fear the change could increase uncertainty and weaken taxpayer confidence.
Abul Kasem Khan, former president of the Dhaka Chamber of Commerce and Industry (DCCI) and chairman of BUILD, said the provision may create unnecessary pressure on honest taxpayers already within the tax net.
"The proposal is unrealistic because most people neither remember nor preserve documents relating to expenditures made decades ago," said Mr Khan, one of the country's top taxpayers.
Instead of increasing scrutiny of existing taxpayers, he suggested that the NBR focus its limited resources on expanding the country's narrow tax base.
He also expressed concern that the provision could be misused, ultimately discouraging voluntary tax compliance.
If approved by the parliament, the measure will take effect from July 1, 2026.
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