Jumbangla Desk: The National Board of Revenue (NBR) has issued a notification exempting the Grameen Bank established by the interim government's chief advisor Professor Muhammad Yunus from tax until 2029. According to the notification, all income earned by Grameen Bank is exempted from income tax for the next five years. BBC news.

Grameen Bank

After this notification of NBR, various discussions and criticisms are seen on social media. But the question is whether Grameen Bank has received such tax-free benefits for the first time?

In response, the former and current officials of NBR say that although the bank has received unconditional tax exemption benefits since its inception, the previous Awami League government stopped this benefit from January 1, 2021.

Abdur Rahman Khan, chairman of NBR, said that others who work with microcredit also get similar benefits. Since Grameen Bank was left out, we fixed it now in the same formula. It is fairness and equality.

The non-profit charity As Sunnah Foundation has been exempted from tax on the income donated till June 2029 under the same conditions.

Analysts say that the government has given tax benefits to various institutions according to the law at various times to sustain in the competitive market with small loans, social and development work or foreign companies.

Economist Mostafizur Rahman said, if it was not in the law, the tension of the previous government with Professor Yunus would never have given Grameen Bank tax exemption until 2020.

However, analysts say that this facility of Grameen Bank has not been renewed due to the policy position of the previous government and some ambiguity in the interpretation of the law.

Why is Grameen Bank exempted from tax?

Chairman of the National Board of Revenue by tax exemption Grameen Bank. In the notification signed by Abdur Rahman, it is said that 'by virtue of sub-section (1) of section 76 of the Income Tax Act 2023, all income earned by the Grameen Bank established under section 4 of the Grameen Bank Act, 2013 is exempted from payment of income tax under this Act.' This tax exemption will be valid till 31st December 2029.

The new interim government led by Professor Yunus took oath on August 8 after the fall of Sheikh Hasina's government in the face of a mass coup on August 5. Later, on August 27, Grameen Bank sent a letter to NBR asking for tax exemption. In view of that letter, the NBR board meeting on September 25 decided to exempt Grameen Bank from tax.

NBR Chairman. Abdur Rahman Khan said, the bank called Grameen Bank, actually they do micro credit operations. In our law, there is tax exemption for those who work with microcredit. It's for everyone else too.

Economists and ex-revenue officials say that Grameen Bank was given tax exemptions from the beginning with many considerations. One of the reasons was that this bank was created to ensure poverty alleviation and women empowerment.

Former NBR chairman Mohammad Abdul Majeed told BBC Bangla that Grameen Bank was created from the beginning for the financial system of the people at the grass root level. It's their bank. As it works for the welfare of poor and women, this organization will get tax concession.

Apart from micro credit, Grameen Bank also does some social work like education loan, home loan, lending to beggars.

What does the law say about tax exemption?

According to the existing income tax law in Bangladesh, there are many clauses regarding who will get income tax exemption benefits. But it has been used in different ways at different times.

The former NBR chairman Mr. Majid. He said, first of all, if an organization is involved in social or welfare work, then they are exempted from this income tax. Second, if an organization works in agriculture, fisheries or local industry protection, they can get tax exemption. Thirdly, if a company wants to develop as a sustainable industrial company in the country, in order to survive in competition with foreign companies, tax is exempted.

According to him, the government takes such steps keeping in mind the overall development of the country.

According to analysts, there is some interpretive ambiguity in the law in Bangladesh about who is exempt from income tax and who is not. Different governments have used it differently over time.

Mostafizur Rahman, Honorary Fellow of CPD and Economist, told BBC Bangla that many companies have been deprived of this tax-free income benefit due to not being within the clear law. Later many of them went to the tribunal and got benefits.

Grameen Bank was tax exempt from the beginning

Since its establishment in 1983 through a military ordinance, Grameen Bank has always enjoyed tax exemptions. They were getting benefits under Section 33 of the Grameen Bank Ordinance. Even though the ordinance was passed into law in 2013, the practice continues.

In view of Grameen Bank's application, NBR has been renewing the tax exemption period by issuing notifications for several years. The last notification was issued in July 2011.

Before the expiry of the period, renewal application was made by Grameen Bank. Later, after several rounds of meetings and high-level discussions of the government, Grameen Bank got the tax exemption benefit of Grameen Bank till 2020 on the condition of filing income tax return in May 2016. Later, Grameen Bank stopped this income tax free facility from January 1, 2021.

Economist Mostafizur Rahman said that professor Yunus' tension with the then Awami League government was created around 2010-11. If it was not in the law, then the government would have canceled this opportunity.

Former NBR Chairman Mr. Majid said that although the matter of giving tax concession to Grameen Bank was from the beginning, why it was not given after 2021, only the previous government can answer the question.

This is the reason for so much discussion

Professor Yunus, head of the interim government of Bangladesh, was the managing director of the bank from the beginning. When Professor Yunus won the Nobel Peace Prize in 2006 in recognition of his efforts to alleviate poverty through microcredit, Grameen Bank also won the same prize.

This bank, which works on small loans and poverty alleviation, got this benefit again two months after the interim government led by Professor Yunus took over after the tension with the previous Awami League government.

After giving tax exemption to the company till 2029, discussions on social media have started.

Regarding this, NBR Chairman Abdur Rahman said, we do not know the reason why it has been excluded since 2021. But for whatever reason, we have done it according to law. We are giving them this facility till 2029 as they work with microcredit like others.

In a separate notification on the same day, non-profit religious charity As Sunnah Foundation also got income tax exemption. Although there was a discussion on social media about income tax exemption for Grameen Bank, no such discussion was noticed about As Sunnah Foundation.

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Mostafizur Rahman said, many people are discussing the tax exemption that different governments give to different organizations due to public welfare work because it is not clear in the current law. If it was clear in the law, maybe it would not have been discussed like this.