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Recently, I have read an update of the budget of Bangladesh where a bill of increasing (25% now) the rate for whitening black money has been passed. According to that, one can whiten their black money by investing in stock market and they have to pay 25% fee to the government. Before this year, the rate was 10%.
Is it healthy for the economy? May be it’s healthy but it’s encouraging corruption. Is there any other country which allows such investment too?
Learn more- https://www.thedailystar.net/business/economy/stock/news/tax-raised-25-investment-black-money-stocks-2120645

Actually the country like bangladesh, pakistan, Nigeria. The corruption was huge in manner. Because the money flow in the economy was an unregulated one. So the corruption and black money was huge in small country. It will be the good place for the cryptocurrency investments.

The thing is the government is only concerned about the rate of the tax that'll be paid to them and not the consequences in terms of fraudulent/corrupt money that'll be made legal through this means. Imo, countries that will operate via this policy will really be corrupt ones whose governments steal from it's people. This sort of policy may also have been created purposely to be productive/favor the rich, capitalists and high ranking officials of the government who make their wealth through fraudulent means, cause they'd definitely also use this medium to legalize huge amounts of their stolen funds basically by paying a certain amount of tax to the government.

I don't understand what "whitening black money" means, OP.  True, I don't watch the news all that much, but I don't think I would have heard about this at any rate.  Can you explain?  Also, when starting a thread like this a link would be useful for readers who either don't understand what's being discussed (like me) or would like to verify the facts for themselves.

None of the replies so far give a clue as to what "black money" is.

Edit:  Shenzou and Coyster, I appreciate your clarification.  I could have looked it up myself, of course, but I was looking for someone to give me the answer so I could merit them appropriately (which I think I did).  I guess it's a term that isn't used in the US, though from what you two posted, there's plenty of "black money" here, no matter what it's called.

Black money is basically money earned legally or illegally, but not declared to the government agencies, so whitening probably means paying the taxes i assume, if you are earning money from crypto i don't think that the government will have any way of tracking that, and paying 25% is a really high rate, so the people that didn't pay the taxes don't think that will do it now, this is a very stupid move by the government, they should be reducing it to encourage paying taxes.

It's actually not a popular concept, but from the little I understand, I'd try to make it somewhat understandable, this is best excerpt I could surf on the internet on what black money actually means:

So based on the foregoing and the explanation of what black money actually is above, "whitening black money" means declaring such assets to the government, making them aware of it, but the source and legitimacy of such funds would not be questioned cause the owners will be charged a certain percentage in tax, so it basically just works like this: you make known money the government has no idea of, money they have previously charged no tax on, you then pay tax on them, integrating it back into the normal, everyday, "white" economy, this act to an extent frees you of criminal charges and the rest. Thus that's why my earlier post criticizes such scheme, as I believe it just favors the criminal-minded government and some of its capitalist organizations to keep embezzling money and getting away with it.

There is an open question of whether stock markets are valid indicators for gauging economic strength. Some say a strong stock market indicates job growth and stability. While detractors claim capital thrown at stocks to raise the market, fail to trickle down to middle class and lower earners.

As is usually the case, the truth could reside somewhere in the middle of both extremes.

Investing black money in stocks could give the private sector funds to grow, hire more workers and elevate standard of living. Or black money invested in stocks, could go towards funding CEO multi million dollar bonuses and private jets. Without the funds trickling down to normal people. It all depends on the implementation and details.

25% is quite high, although the government has the reason to impose such very high tax on black money entering the whitening process. In the first place, if the government is really bent on curbing illegally-accumulated wealth, such money could simply be confiscated rather than allowed to join the circulation of clean money. What the government is doing is a compromise. Syndicates should even be grateful for this. However, considering that it has grown from 10% to 25%, some illegal actors might find a way to avoid paying it altogether.

Do you have any proof for this?

Every now and then, the governments announce amnesty for those with unaccounted funds, and in this case it seems to be a similar measure. Here in India, a few years back the government allowed individuals with unaccounted money to legalize them by paying the taxes (plus a small penalty). Here the top most tax bracket is 43%, and with penalty added, the deduction will account for a majority of the funds. And that is why I am quite surprised with the 10% figure that you had mentioned in your post. It is too low. So this 10% penalty is in addition to the tax liability?

25% is too much to increase the tax rate the current budget provides special opportunities to bring black money into the mainstream economy. The government can have the opportunity to launder black money the tax rate may increase if someone makes a brand new investment they can get a chance to launder black money with only 10 percent tax. New investments have stalled due to corona the government faces the challenge of increasing revenue collection and creating employment overall, policymakers have agreed to have a special opportunity to launder black money.

So they are now basically tolerating money laundering because that's what vibe I am getting at this black money turning into white money. If this is going to happen, a lot of money launderers will flock to Bangladesh and they will clean their money there.

This law for taxation shouldn't even exist in the first place because this is all bullshit, it's basically a blatant money laundering and this doesn't even help a lot with the current rampancy of money laundering around the world.

 There are times when governments do it as a way to bring money to the surface, because they need it, but I do not think it is good, because it encourages people not to declare their money in the future, thinking that there will always be an amnesty similar to this one. We should also think that with less taxes people would not hide so much money, so we would not reach the absurdity of putting high taxes, and when we see that people do not declare, having to make amnesties of this type.

What do you mean by "black money to be whiten"?Do you mean money laundering?
I've never seen a country that allows money laundering,if the launderer pays a fee.This is ridiculous.
Normal countries will try to catch the criminals and confiscate all their dirty money.I guess that the government of Bangladesh can't handle the levels of crime and corruption,which are conducted inside the country.
That 25% fee seems pretty high.The criminals will choose to launder their money somewhere else and pay lower fees.

How do they know the black money increased up to 25% if it weren't declared?  Are these the ones we call blood money too?

I'm not sure if it's going to whiten the black money by investing in the stock market as far as I know the brokers will still ask the sources of funds. It has to be laundered first for it to come out clean that's how it can be taxable and when ready for spending.

Black money is actually money surreptitiously made that isn't accountable to the government and such money because they are hidden money, they are not taxed. Perpetrators of such are always people who are in government or connected to the government. Corrupt government are always culprit of black money.



No, they are no where related if you are really serious on that concerning blood money.


This explains a thing further on the blood money as being money paid to either placate bereaved family on the blood or death of their own.

Again in my own view, blood money apart from being a title of a movie in Nigeria depicting I'll gotten wealth from shielding of blood and killing, is money gotten from involving usually from  money made by spilling of human blood or "rituals"

The meaning is in the first few replies in this thread, it's another form of money laundering i must say, but with a different term to make it not look as bad as it actually is, the thing is the government can claim that the money they are "whitening" isn't illegally gotten and that the owners have just basically not paid any previous tax nor declared their source, just to make the situation look good from their own side and that they are not accepting stolen money; but if we're to be honest with ourselves, majority of "black money" is acquired through illegal means and if you'll only have to pay a certain amount of tax to freely use and invest them, then it's a good bargain.
I don't think it is, it looks fair to me, when you consider that the legitimacy of your funds wouldn't be questioned.

This means that the government favors stocks over any other investment, which is kinda off since criminals can still create opportunities for themselves by investing in stocks and just paying the 25% fee to get done with it. The companies who own the stocks will get their assets inflated for a short while until those with the "black" money decides to pull it out, and they basically just get their hands clean. The government is literally trying to help criminals here and I don't think that it's a good front.

I think it won't be long when the illegal money will be gotten from extorting the government and the economy themselves, and when this happens it won't be taking or reinvented into the economy but another different countries economy, I don't think illegal money should be condone regardless of the benefits the countries economy will have.
Form people's experience I can hardly think of an illegal money where someone, countries economy, companies and many more aren't the one being extorted from it.

In my opinion black money is an illegal currency and there are individuals or organizations that take advantage of this market to launder money in an abusive way. and i personally feel it's not a good thing if we don't try to stop it, the crime will get worse and worse.

25% is the penalty for converting this black money in to white, and I don't think that it is excessive. In other countries, the penalty can be much higher. Here, the individual is avoiding jail term and a heavy financial penalty for tax evasion. So I would say that 25% penalty is going too lenient on those who break the law. But I guess that the government is in desperate need of funds and the stock market also needs a fresh injection of cash. So in a sense, I don't want to oppose this measure. If they don't allow the amnesty, then in all probability these funds will flow out of the country to some offshore tax haven.

I should have shared a link in the OP. Black money simply refers to the undisclosed income. That can be legal or illegal source although I would call all the sources illegal.
And for this black money to be whiten, govt is asking 25% fee if this money is invested in the stock. Previously the rate was 10% only.
You may also learn from here- https://www.thedailystar.net/business/economy/stock/news/tax-raised-25-investment-black-money-stocks-2120645

Agreed, this is something that is a mistake, besides they mix two different concepts in one which is yet another mistake, if someone got money legally but simply decided to not pay taxes then that is one thing, but money obtained through illegal means like selling drugs and other crimes should never be allowed to be made legal and yet this is precisely what they are encouraging.

And then if that was not enough they have the bright idea to charge a 25% tax for the privilege, which is something most of those people will refuse to pay, after all if they already made the effort to avoid being taxed on their earnings why would they accept such a high tax now?

Depends on the nations growth. If we are talking about a small nation then if you can take the dark money and put it in stocks that will make the companies richer and grow bigger and that helps the nation a ton, we need companies to grow bigger and bigger and be global brands in order to help that nation, any poor nation with one huge company that sells in tens of billions to world would be benefiting from that and growing out of a poverty nation to a developing nation thanks to that.

However if you are already a big nation then I doubt that you would "need" that, only would allow that to happen because well money is money and who says no to money so they still take it even though they do not need it, it's called greed. Which is why there is really no way to stop this, dark money will find its way into pockets of rich people to launder one way or another.

Looks like a sound idea. Obviously, people that run businesses underground will continue to do so, so there's no stopping them, it's basically very similar to legalizing a gambling business. However, it is no secret that for such entrepreneurs withdrawing and using money they make from the black market is a big problem.

Such terms will encourage these people to unravel their true income, because even with 25% still, it will probably be more convenient, less risky, and maybe even cheaper than money laundering. At the same time, black money is most often pretty big money, so this will be a good profit for the government.

Of course, there should be some limits, certain types of businesses shouldn't run under any circumstances, no matter how much money the government can get from it.

It sounds like a legalized money laundering scheme by a corrupt government. However, this scheme is well-known tax amnesty type:

Source (https://en.wikipedia.org/wiki/Tax_amnesty)

I think it will reward criminals, corrupt politicians, etc., where they should be punished. Sure it will boost the government revenue but I don't think this type of tax amnesty is ethical. I prefer the other tax amnesty type where it simply waives penalty from tax evasion.

Bangladesh is not the first country to bring such an amnesty scheme. A few years back, there was a successful amnesty scheme in India, which brought billions of USD to the treasury. But one drawback is that criminals may use this opportunity to legalize the funds they earned through illegal means - such as robbery, ransom, corruption.etc. The government knows that at least some of the funds may be of dubious origin. But when they are desperate for funds, they just ignore these hard facts.

No it's not, the taxes that the money launderers are evading is just far too big to let it pass by. Plus it also contributes to the global problem of financial crimes, look at Panama Papers. This bill that Bangladesh is planning to implement is going to be a toleration of money laundering and it will stimulate money launderers around the world.

This looks like a permanent fiscal amnesty. There was one in Spain not too long ago, because the government was desperate for funds so they were willing to ignore the tax evasion penalties and charges as long as the money was brought to light and paid the right level of tax.

However, there is a big difference between a one-off and a permanent mechanism for money laundering. Also, even if the money is legalised, there should be some questions about where did it come from, that is, is not the same money coming from drug selling that money paid "in hand" with no records for selling a house or other stuff or even an undeclared inheritance.

If you want to have more drugs, violence, tax evaders and general blood money on the streets then probably it's alright for you to allow dirty money to be cleaned because that's where those money likely come from. There's no good coming out of this Bangladesh legislation to make dirty money clean no matter which angle you are looking at it.

The problem is not to get those dark money into legalized way so that the world could use it, its about encouraging it. Sure there is no way that we can ever stop bad people doing bad stuff, ever since the start of humanity there were bad people so we will continue to have it until the day humanity is fully gone as well. However what I do not understand is that why would we do something that would be encouraging them to continue to do what they do.

We should try to make it as hard for them as possible so that the bad people who are bad at being bad would get caught and they would be jailed, the really big bad ones will already grease the hands of some politicians and be fine anyway, so we should not be really making it easy for all the bad people to just launder their money. Which is why I think this is a bad idea, just ban all the dark money going into anything.

I think that it is definitely not healthy for the country. Because as you indicated, it motivates the corruption. In the place where corruption exists and increases, that place is just dead already. Corruption is one of the worst things can happen to a country. It starts making the country poor also.

The government's aim is to basically get more people under the umbrella of the tax-paying formal economy. In developing countries, it is a possibility that people tend to earn money in illegal, not necessarily evil ways. This can be because they don't have the understanding to setup a business with all the legal and taxation compliance. Over time, as they start earning more, it become obvious that maintaining cash payments and just a manual system of collections and payments saves them from tax too.

I think such amnesty schemes can be the precursor to such businesses having an opportunity to come to the mainstream. Though, what is required is that it should be accompanied with some sort of a warning for an "audit" on those who choose not to exercise such an option. This is only from the governments point of view.

From the viewpoint of a lot of individuals, paying tax itself may not be agreeable to them. For example, if you pay tax on your fixed salary, why should you part with tax when you earn something extra from hustling or being part of an online economy? This is why it is not so straight-forward to categorize everyone having "Black Money" as evil, corrupt and unworthy of any form of recourse and redemption.

Country like Bangladesh, well it is straight away bad idea for such country because they themselves don’t have enough funding options to run the government in proper fashion. I have seen Bangladesh and the capital that is Dhaka. They are trying to be overpower but they have failed many times due to poor business standards and low quality of import export regulations.

In such country it’s worst idea to even have black money your pockets. Because that’s what making the country poor over the time. These things can disturb ongoing banking systems wildly and they are affecting no matter what.

On contrary I believe that is even better when you are a very poor nation. Why? Because that means as a poor nation you can host all the world's biggest criminals (only accept amounts over 100 million for example) and this could be people who are truly bad like drug dealers and mafia boss and so forth, or you could go very easy taxes on big companies like amazon or facebook or stuff like that and it would allow you to become tax havens for those nations as well.

There are tons of nations that allow these huge nations to have "headquarters" there which we all know their head quarters are in silicon valley but they just call it "one of their offices" and then plant their fake headquarters in panama or Bahama or Ireland or someplace like that. A country like Bangladesh should get as much money into the nation as they can without looking where that money comes from, just so they can get a bit of that money.

Isnt too huge to add up tax as 25% from your earnings from black money? I mean, it could be a help to improve their own economy but the people behind the whiten money will suffer. Will this way of putting tax from black money to whiten be fair enough?

They should look more deep about this one, as they have lessen it down to 10% and they allow to invest their money to stocks? At some point, it will give a good outcome for both government and the client.

Your government is just on it for the money, for the tax and they wouldn't mind where the money will be coming from as long as it's invested in stocks and they have to pay for the tax.

That's the process that they've made and I think there will be a lot of money that they can collect from that process as if they're allowing those 'black' money or coming from illegal(?) I guess.

Unfortunately, Bangladesh is ranked at the top of the list of the most corrupt countries in the world. Most of this black money is stolen from the people, and the corrupt government launders it in exchange for fraudulently taking a percentage of the money. In other words, they participate in stealing the people’s money and remain silent about it in exchange for a bribe they take, which they call a “tax”! !! This is corruption. You can do all the illegal things like drug and weapons trade, selling human organs, bribery and theft and then you can make this dirty money legal by putting it on the stock exchange and giving 25% as a bribe to the government!!!
 Money laundering in this way is not only harmful to the health of the national economy but is also destructive for the whole country.

Investing money to stock market still not a guarantee to earn because risk is there and it only will becoming good if only the investement will be successful. However, investing in a certain projects own and manage by you would be prefer than letting you entrust your money to someone like in those stock market. It would not be a good idea in my opinion.

Of course it has a bad impact, laundering the money successfully means that the lives that was harmed or taken making those money will not see justice because the money got cleaned with all it's blood like no one was hurt. Laundering is never a good thing because it makes life unfair because they don't pay their dues to the community through taxes and fighting to survive fairly.

I agree these points, to some extent. It is true that money laundering mostly results from corruption and other illegal activities (including crime). When the government is announcing amnesty, in effect it is making sure that the perpetrators of these crimes will be never brought to justice. But at some point of time, a balance needs to be made. The crimes were committed many years ago. If the amnesty is not there, then the funds will remain stuck, or they will flow out of the country. There are two benefits from the amnesty - the government will receive a large fraction of the funds as penalty, and the removing amount will be injected back in to the legal economy. 

I don't think that what you're trying to say is going to be a good thing because that basically says that time is on the side of the perpetrators. No balance is needed to be made, crime is crime no matter how much you look at it and it should be specially served when the perpetrators are the elite class of the society.

That is the case about finances in the crime world, the government wants their piece and without that you are basically doing something illegal by going against the government, but when you are giving them a choice to take your money then your crimes become "white crimes" as well.

Just to give an example the amount of salary that should be paid to people for working outside of their legal time comes down to about 50+ billion dollars a year, so collectively business all over the world make people work 50+ billion dollars worth extra time without pay, does that get a penalty? Absolutely not, because those companies pay their taxes and bribe their politicians.

Same goes for drug dealers and mafia as well, pay the politicians their bribes, and launder your money however you want without worrying about anything. This means either do none of it, or do all of it because allowing one but disallowing the other makes no sense.

I also have found the news somewhere that Bangladesh govt. are giving the chance to make the black money into white money .I think it could be some beneficial for the economic strength but ultimately its encouraging the corruption .The people who earned a lot black money they are now become happy and they will continue such as work again .So that i think its not a good decision at all to give the chance to the people who are corrupted .

Being a resident of India, I need to say that when the government announced the amnesty program a few years ago, the largest volumes of unaccounted money was reported from some of the individuals who are regarded as proxies of known politicians. Some of the news papers reported that more than 50% of the converted funds were owned (either directly or indirectly) by the politicians. I agree with your point as well. Legalizing one form of crime and banning another form doesn't make sense. But in general, it has been claimed that these sort of amnesties encourage more crime and corruption.

That might be indeed correct! In most of the Asian countries the most corrupt people are the leader themselves and in order to cover their corrupt actions they usually adjust various policies and this 25% deal might be another one of those.

If the government was really concerned about people not paying taxes and wanted to change it, it would have been a better option to force higher penalties on those who are evading tax by any means. By giving them the benefit of the doubt and allowing them to convert their black money to white is questionable, to say the least. Whatever the reason might be, this kind of approach towards wrongdoers is not something you want to see from a growing nation. Such moves can pull the whole economy down.

These sort of phrases should be phased out if we want to see a more equal and freer world around us, subtle written biases like this are understandable but we should all make efforts to think about the connotations of our words. The term is money laundering and the government is looking to run an amnesty against such illegitimate funds. It can be a good start to eliminating corruption and raising funds, however you need to figure out how those funds were gained in the first place to stop it reoccurring. Unfortunately I have a feeling that a large portion of the beneficiaries maybe politicians or civil servants who have been raising money through favors. It is a very tricky subject to face, because in many circumstances these people should be in jail for essentially stealing from every citizen around them, but that is also expensive by itself  :-\

I am glad they increased the rate because such practices are shady and never helping the economy at all. I mean someone can scam others and even get his money to whiten/legit by paying a small sum of money? That's horrendous I think. I understand the government wants people to pay taxes and maybe pay their taxes properly from the next cycle but this opens the door for people who earned their money illegally as well.

I know you are Bangladeshi and it feels bad to say but I think your government is only thinking about taxes right now. How does this helps the economy is beyond my understanding from whatever little knowledge I have about how economies grow.

Some problems I directly see are:

1- More people will evade taxes now and if caught can always pay the 25% and get away. 10% was even more criminal because it's like encouraging people to avoid paying taxes.

2- Theft will certainly increase because people know how to get their money to whiten.

That is the repercussion of this law. If they just allow black money to whiten by paying about 1/4 of its value, then, more and more people will just use this route to whiten their ill-gotten money.
However, maybe the government just think of this method to at least get something from this ill-gotten wealth rather than not getting any of it.
Also, they can get the record of those people who will submit their docs and who will avail this service. So they have idea who are these people who are getting black money.
A lot of people are already evading tax so just get certain percentage of it is already good for the government.
But do you think these people will expose themselves and just pay the 25% fee? I believe some will not abide this new protocol and just keep the money within themselves and find how to stash it on their own.

It encourages such practices and just because the governing bodies are money-minded the rate of crime will go upwards. It is similar to handing over guns to criminals and assuring them to get their money into their banks for a percentage of it. This means people who were paying taxes honestly and on time were fools.

It doesn't contribute to economic growth at all and I agree with you that it only gives rise to more criminalistic activities because the governing bodies are supporting them.

Maybe some kind of a notice that this is a one-time leverage/advantage given to the citizens in order to correct their mistakes and will not be sanctioned in the future would have done much better to the economy.

And this is my problem with this, if we were talking about just about those that have avoided to pay their taxes but that still owned a legal business and they just engaged on a scheme to save themselves on taxes then that is one thing.

However it seems they are going to allow this amnesty to apply to all funds regardless of where they come from, which means criminals could use the opportunity to legalize their funds that way and this is never a good thing.

Lol I have seen or heard of a thing like this. For me it is totally wrong, and it shouldn’t be allowed in any country. Any government that allows such laws in their country is trying to encourage corruption on their country.

Imagine countries where government officials are embezzling money and then using this means of paying tax to whiten it lol. That’s not good, such rules must have been set by a corrupt government so as to escape the consequences of the actions that they take. It’s nothing new that all these government are so corrupt and any single opportunity they see, they use to steal from the country’s wallet. So setting rules like this means that they are trying to encourage such things.

In the last fiscal year, huge money was whiten by this corrupted people. I had a closer look after reading this news. This is ridiculous that an honest businessman has to pay far higher amount as tax than a corrupted man who has whitened the black money last year.
Still, after increasing the rate, it’s low than some of the business corporate taxes.
Few businessman have already raised their voice against this and they were also mentioning about encouraging corruption by govt.

No, I don't think that in any way it's going to be a good thing because if you think about it, laundered money is an unfair money, a lot of people are paying their taxes and you just get in the stock market and throw in your dirty money in there with no taxes being paid. I don't know what came to the mind of the people who proposed this law but I am sure that that person or politician isn't worthy of any vote in the next election.

Depends on the situation. The problem with taxes is that they affect only the middle class. The rich use numerous loopholes to avoid paying taxes. And they have most of their assets in tax havens such as the island nations in the Caribbean. Now if the government gives these rich people an option to invest the money in their own country, instead of carrying it to Antigua or Dominica, who is going to benefit from such a measure? You can claim that it may increase future cases of tax evasion. But it is up to the authorities to prevent future cases. Here we are talking about funds that has been laundered already.

               I'm not absolutely sure if it's just me or is it that a lot don't get what black money is? Or maybe it refers to illegal money? If it does indeed refer to illegal money then 25% is till too low specially when we think about how taxes help the overall situation of a country. And besides, this shouldn't even be allowed to begin with so I don't quite see anything wrong with the tax rate. Rather, it may even be very beneficial from both sides with the government being at the losing end. At least though, there is something to gain from these black money that can help the country grow.

I have not thought about it but this is entirely possible, which just show us how corrupt governments can be, it is possible they do not even care about the taxes they will receive out of this and instead this is just a way to justify what they have been stealing.

But if they opened this opportunity only to themselves then it would be too obvious what they are doing and as such they decided to open this opportunity to everyone else in order to hide the fact they are doing this just to make the money they stole legal and to be able to spend it without having to hide the source of it.