The tax-intelligence team of the National Board of Revenue (NBR) suspects that Tk 7.21 billion in remittances declared by a taxpayer may be linked to arms purchases by close allies of the ousted prime minister, Sheikh Hasina.
The large sum, claimed as remittances in the tax records, was declared by an individual who is not a wage earner.
Tax officials suspect that the individual was not an expatriate and showed the money as remittances in the tax documents while residing in the country.
According to an investigation report obtained by The Financial Express, the individual, SM Faruqui Hassan, a resident of Kalabagan in Dhaka, is a director of several companies, including Hotel Lake Castle, Protik Developers, Protik Ceramics, and Protik Food & Allied.
Faruqui, aged 67, in his tax return declared that Chinese companies, including Norinco International Cooperation Ltd and China Shipbuilding and Offshore International Co Ltd, sent the remittances from China.
The amounts were shown as remittances received between FY13 and FY24.
According to the Bangladesh Bank rules, if remittances are sent through official banking channels, a 2.5 per cent cash incentive is provided from the state exchequer.
The taxpayer's file has been reopened following concerns over substantial tax exemptions granted on these remittances. It was found that several tax officials had closed the case from 2017 to 2021 without conducting proper audits.
An NBR investigation has identified a tax commissioner and an additional commissioner (range officer) as being under scrutiny for resolving the taxpayer's case with minimal tax demands - only Tk 448 in FY18 and Tk 15,095 in FY19.
"It is surprising how the tax file was closed despite the substantial remittance claims by a single individual," said an NBR official. "We suspect an underhanded deal between officials and the taxpayer."
The NBR report names Abu Syed Mustaq, currently a member of the Income Tax Department, Md Golam Kabir, and AKM Shamsuzzaman as officials responsible for overseeing the case.
The taxpayer in question has claimed tax exemptions on the amount under the existing income tax laws. However, officials determined that the individual was not an overseas worker.
Noted economist Dr Zahid Hussain has recommended scrapping remittance incentives, given the government's financial constraints and the higher yields for wage earners due to currency devaluation.
"When the 2.5 per cent incentive for remittances was introduced, the USD exchange rate was Tk 85. It has now escalated to Tk 122," he said.
"Although there are political implications, these incentives should be scrapped as they create opportunities for tax evasion by influential groups," he added.
A senior official from the Income Tax Intelligence Unit said the tax authorities would impose taxes on the amounts if Faruqui fails to provide proper documentation supporting the remittances."The amounts will be taxed at the highest rate applicable for the respective tax years," the official said.
Several more cases involving substantial remittance claims are under investigation. However, the tax authorities do not intend to pursue cases involving small sums.
A senior tax official revealed that another case involving tax incentive abuse amounting to over Tk 1.0 billion has been detected by the Tax Intelligence and Investigation Wing.
"Our goal is to send a strong message to tax evaders that we are actively monitoring and taking action against tax frauds," the official added.
doulotakter11@gamil.com
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