The National Board of Revenue (NBR) has fined Eastern Bank Chairman Showkat Ali Chowdhury nearly Tk307 crore, equivalent to the $25 million identified in the United Kingdom, even as efforts to repatriate the funds have become prolonged and increasingly complex.
The penalty was imposed under the provision of the Income Tax Act relating to undisclosed foreign assets, creating a legal avenue for the government to recover in Bangladesh an amount equivalent to the assets held abroad.
The Large Taxpayers Unit (LTU) of NBR issued the penalty order against Showkat Ali on 15 March this year. Based on the exchange rate prevailing on that day, the penalty was fixed at Tk306 crore 87 lakh and 50 thousand. The LTU confirmed the matter to TIMES of Bangladesh.
Section 21 of the Income Tax Act states that if undisclosed foreign assets belonging to a Bangladeshi taxpayer are identified and the taxpayer fails to provide a satisfactory explanation regarding the source or nature of those assets, the tax authority may impose a penalty equal to the fair market value of the assets. If the penalty remains unpaid, the law empowers the authorities to recover the amount by selling or confiscating the taxpayer’s assets.
Showkat paid Tk136 crore in tax on the previously undeclared overseas funds in May this year. However, LTU officials said he has yet to pay the penalty.
The penalty comes after Bangladesh failed to bring back the $25 million identified in the United Kingdom.
A Bangladesh Financial Intelligence Unit (BFIU) intelligence official told TIMES that the UK’s National Crime Agency (NCA) required Bangladesh to demonstrate not only that the funds were illegal under Bangladeshi law but also that they had been obtained in violation of UK law before they could be returned.
According to the official, authorities from the two countries exchanged eight rounds of emails over the issue. However, the four-week legal restraint period expired before the process was completed. After the period ended, Showkat Ali transferred the funds to the United Arab Emirates (UAE), making recovery significantly more difficult. Efforts are now under way to recover the money from the UAE, the official said.
In February this year, the NCA informed the BFIU in writing that it had frozen Showkat Ali’s $25 million for four weeks. The agency also stipulated that the information could not be shared with any other Bangladeshi authority or even submitted before a Bangladeshi court.
A senior BFIU official said the investigation into Showkat Ali remains ongoing and that appropriate legal action will be taken upon completion of the money laundering investigation.
“The government is actively working to recover the money,” acting NBR chairman Ahsan Habib told TIMES.
NBR officials said that if Showkat Ali fails to pay the penalty, the authorities have the legal power to recover the amount by selling or confiscating his assets.
TIMES sent written questions to Showkat Ali Chowdhury asking whether he intends to appeal against the penalty and whether he has agreed to repatriate the $25 million to Bangladesh. He had not responded by the time this report was filed.
