Billions of taka has been shown invested in fish farms by numerous business owners allegedly for taking advantage of tax incentives meant for farmers, amid a tantalizing change of fortunes.
Officials say a tax-intelligence team fielded by the interim government following the recent regime change has tracked down such tricks of this breed of tycoons. Reported earnings from fish-farm investments shown in wealth statements by some lawmakers had triggered humour in parliament in the past-as an apparent cover-up of fast acquisition of fortunes.
Several tax files have come under scrutiny by now, revealing gross irregularities in availing of the tax-cut benefits by some major corporate entities, they have said. Findings of investigations led the tax intelligence and investigation wing of the National Board of Revenue (NBR) to issue bank-account-search notices last week to four heirs of Abul Khair Group of business.
The inheritors of Abul Khair Group had reported Tk 1.40 billion from fish-farm income. The tax sleuths suspect that the four owners of the corporate-Abul Kashem, Abul Hashem, Abu Syed Chowdhury, and Shah Shafiqul Islam-have evaded paying taxes by “falsely” declaring fish-farm incomes.
Tax authorities have compiled data from three fiscal years-2019-20, 2020-21, and 2021-22-that suggest tax avoidance through “fraudulent” declarations on fish-farm incomes.
Allegations were raised that the group’s owners established Shitol Fishing as a shell company, reporting a total income from fish farms of Tk 1.36 billion over three years before shutdown of operations. Tax officials suspect that the fish farm was merely a front to launder black money at lower tax rates.
In a separate investigation, the Central Intelligence Cell (CIC) found that Nasa Group owner, Nazrul Islam Mazumder, showed Tk 2.15 billion as fish-farm income.
Also, Rokeya Begum, wife of Shahidullah Khandaker, former Secretary of the Ministry of Public Works, owns Rani Foods and her tax file shows Tk 1.10-billion income from fish farms, said one tax-intelligence official.
“Umme Habiba, the owner of AI BD company, has also shown fish-farm income and our investigation in those cases is going on,” he told the FE writer. A senior tax official from the wing says most of the big fishes-politicians, bureaucrats, businessmen and so-have shown income from pisciculture in their tax files.
Abuse of the existing income-tax law as well as taxmen’s reluctance to check the tax files with fish-farm incomes are the two prime reasons on growing tax evasion using the tactics, he adds. “We won’t go for small amount of income from fish farms, for example Tk 0.5 million to Tk 1.0 million. Taxpayers having shown a considerable amount of such income would be brought to book through crosschecking where they have sold fishes or source of procuring fry,” the tax official says.
A threshold of Tk 5.0 million could be kept as tax-exempted or reduced tax income from fish farms, officials have said.
The investigation has been launched based on suspicions that black money was laundered by showing investments in a shell company under the guise of fish farming. “We have repeatedly proposed in the national budget that tax incentives for fish farms need to be rationalized,” says the official.
“It would be wise to allow small farmers to enjoy cut-down tax rates while requiring large corporations to pay at regular tax rate on their fish- farm income.”
According to National Board of Revenue data, income from fisheries is currently tax-exempted up to Tk 1.0 million. The tax rate is 5.0 per cent on the next Tk 1.0 million, 10 per cent on the following Tk 1.0 million, and capped at a maximum of 15 percent for income exceeding Tk 3.0 million. In contrast, regular individual taxpayers are subject to a 30-percent tax rate on their income.
In FY 2021-22, the government imposed a 15-percent tax on fish-farm income exceeding Tk 3.0 million. Before that, income up to Tk 1.0 million was tax-free, with tax rates of 5.0 per cent and 10 per cent applied to the next tiers, respectively.