Did Protik Group chair stage ‘Tk 7.3b remittance drama’ to whiten money?

A businessman brought home Tk 7.3 billion as remittance or expatriate income from abroad taking advantage of tax exemption and cash incentives. After National Board of Revenue (NBR) chairman Abdur Rahman Khan revealed this information at an event on Monday, a lot of discussion and criticism followed. However, the NBR chairman did not disclose the identity of the businessman or how he brought so much money.

After the NBR chairman's statement, it was found out that the incident happened four years ago. Not Tk 7.3 billion, but the businessman in question brought Tk 7.21 billion from China as expatriate income. The businessman is a taxpayer in Dhaka's Tax Zone-5. He is a small businessman. The businessman showed this huge amount as wage earners' income in his tax documents. Since there is no tax on expatriate income, he did not have to pay any tax on the money brought from abroad. On the contrary, he took cash incentives. But the issue just did not end here.

It has been revealed that Syed Mohammad Faruqui Hasan, chairman of the Protik Group, brought in huge amounts of money from China in the name of expatriate income. This group has businesses in various sectors including housing and services in the country.

Faruqui Hasan made the plot of bringing in remittance to whiten black money. Tax officials think the money brought in might be laundered and earned from commission. The money might not belong to Faruqui Hasan alone. Tax intelligence officials suspect that this money may belong to influential people associated with the then ruling Awami League. The accounts of Faruqui Hasan and his company in various banks have already been seized.

This huge amount of money came into the country as expatriate income from three Chinese companies - Norinco International Corporation, China Shipbuilding and Offshore International Company - for 9 years.

According to information from Tax Zone-5, around Tk 2.69 billion entered the country in the fiscal year 2021-22, the amount was Tk 770 million and Tk 810 million in the preceding two years, respectively. Earlier, around Tk 3 billion was transferred in the previous four years.

The entire amount was mentioned as remittance in tax documents, in collusion with tax officials. The NBR's tax intelligence unit is now looking into how such a large sum was exempted from taxation and who the actual beneficiaries are.

On the condition of anonymity, a senior NBR official told Prothom Alo that illicit earnings from corruption and irregularities may have been funneled abroad before being brought to the country as remittance, in an effort to exploit tax exemptions and receive cash incentives.

“Remittance is tax-free, and no questions are asked about the earnings. Hence, this opportunity was taken. On the flip side, commissions from foreign businesses may come under the cover of remittance. Since the group in question is not so big, suspicions arose over such a large amount brought by the businessman,” he added.

While bringing laundered money from abroad, there is a scope to present it as remittance. In the system, funds are transferred abroad under the guise of trade or through informal channels such as hundi, and later are brought home again as expatriate income. Thus, the funds remain untaxed and get whitened at the same time.

Also, influential individuals may receive commissions from giant companies for facilitating businesses in Bangladesh. The commissions are transacted abroad and can be brought home as remittance, with no tax. Thus, the money gets mainstreamed and earns extra incentive to the owner.