According to the National Board of Revenue (NBR) data, on Friday a record Tk 700 crore of black money was whitened by paying just 7.5 percent tax.

Although Friday was a weekly holiday, the central bank asked the banks to remain open to provide the opportunity to black money holders. The central bank's clearinghouse was opened twice in the morning and at 7:00pm. The banks were open till 9:00pm.

In the last eight days of June, about Tk 2,000 crore of black money was whitened. The total amount of black money whitened in the whole fiscal year that ended on June 30, stands at Tk 4,603 crore.

This is a record for the country where opportunities for whitening black money has been given time to time since 1976. The past opportunities saw whitening of a total of Tk 3,920 crore of black money.

According to NBR sources, the board received Tk 345 crore in taxes from the black money holders during the fiscal 2005-06.

The NBR said the largest of the black money owners, who are smugglers, crime syndicate bosses, bribe takers, etc however did not avail the opportunity.

"Those who whitened their money are mainly businessmen and professionals, who had evaded paying taxes in the past," said a high official of the NBR.

The NBR also secured a record amount of income tax collection in the fiscal that ended on June 30.

"Income tax collection grew by 28 percent and the NBR collected a total of Tk 7,140 crore, exceeding the target of Tk 6,960 crore," said the official. In 2004-05 fiscal, the NBR collected Tk 5,577 crore in taxes.

"It shows that the measures taken by the NBR against tax evasion are working. People are now paying more attention to paying taxes," he added.

According to NBR data, 7,254 persons whitened Tk 4,603 crore of black money during the recently closed fiscal. Among them, 5,151 are from Dhaka and 1,516 are from Chittagong.

"Most of those who whitened their money are basically previous tax evaders. They are mainly businessmen, industrialists and professionals. The professionals include doctors, engineers, lawyers, chartered accountants and others. Besides, there are defence officials and bureaucrats," said the NBR official.

"Most of the directors of private TV channels also availed the opportunity. A newspaper owner who is also a businessman legalised his money in three instalments," he added.

Banking sources said they suspect that many of these people do not actually have the amount of black money they paid taxes for.

"Many of them took this opportunity to legalise future black money -- because they know from this fiscal year on they will not be able to just pay 7.5 percent tax and legalise their black money," said a managing director of a private bank.

NBR officials said with the end of this episode of whitening black money, they will ask the black money owners for details about where they have kept their whitened money.

"We will see if they keep this money in the banks or in any other form. This will prevent whitening of future black money," said a top NBR official.

The NBR however has not yet compiled details about the amount of black money that was indirectly whitened through purchases of cars, lands and apartments. The opportunity to whiten black money through purchases of apartments, cars and lands will continue in the current fiscal with a higher tax rate.

According to an estimate by economist Abul Barakat, the economy of Bangladesh every year generates some Tk 70,000 crore of black money while Tk 175,000 crore of black money circulates in the country every year.

POLICY AND WHITENED AMOUNT

Only a few black money holders took the opportunity provided by the martial law government in 1976 for whitening their money, and Tk 70 crore was whitened that year.

During 1987-88, the government unconditionally offered the opportunity with 20 percent income tax, and collected Tk 40 crore in taxes against Tk 200 crore of black money whitened.

In 1988-90, the government retained the provision with 20 percent tax but said if newly whitened money was invested in industries within two years the tax rate would be 10 percent.

The new policy resulted in whitening of Tk 250 crore of black money, generating Tk 35 crore in taxes in 1988-89. The next year Tk 400 crore was whitened and Tk 40 crore was collected in taxes.

In 2000-01, the erstwhile Awami League government reintroduced the provision after more than a decade's gap. It unconditionally offered the money whitening scheme in exchange of 10 percent tax. The provision generated Tk 100 crore in taxes against whitening of Tk 1,000 crore.

The BNP government in 2002-03 introduced a system under which black money owners could whiten their money without paying tax if they invested the money in production or service sector or spent it for purchase of shares. In the next three years, Tk 2,000 crore was whitened.