Tax to apply even if wealth is just Tk 1, says policy proposal

❐ Staff Reporter

The National Board of Revenue (NBR) is working on a proposal to impose a tax on inherited assets in the upcoming budget for the 2026-27 fiscal year. If the proposal is implemented, tax may have to be paid on any inherited assets, which will fall under the purview of most citizens, according to relevant sources.

According to NBR sources, there is a plan to divide inherited wealth into two categories – close relatives and distant relatives. Wealth received from mother, father, brothers and sisters will be considered as close relatives. In this case, the tax rate may be set at 1 to 5 percent. On the other hand, the tax rate for distant relatives may be 3 to 10 percent.

According to the proposal, tax will be applicable on assets worth more than one taka. As the amount of assets increases, the tax rate will also increase in stages. In the case of close relatives, 1 percent on assets up to one crore taka, 2 percent on the next five crore taka, and then in stages up to a maximum of 5 percent. In the case of distant relatives, there is a plan to impose a tax of up to 10 percent under the same structure.

This tax will be determined based on the current market value of the asset. For example, if the original value of an asset is low but the market value is high at the time of inheritance, then tax will be paid on that excess value.

In this regard, Dr. Syed Aminul Karim, a former member of the NBR’s Tax Policy Department, said, “There needs to be a certain limit or threshold for implementing such a tax. If taxes are imposed on very low-value assets, the common people will also fall under the tax bracket, which can create widespread repercussions.”

He suggests a phased implementation and initial piloting in specific areas.

He also mentioned that since there is no specific method for determining the market value of assets under the current income tax law, one has to rely on the concerned official to determine the tax, which can raise questions of transparency.

A senior NBR official said that work is underway to introduce inheritance tax as per the government’s instructions and various international models are being reviewed in this regard.

Several countries around the world—such as the United States, the United Kingdom, France, Germany, and Japan—have inheritance taxes. According to the OECD, these countries collect about 0.15 percent of their gross domestic product (GDP) from this sector. Accordingly, Bangladesh also has the potential to generate a significant amount of revenue from this sector.

On the other hand, Tamim Ahmed, Senior Research Associate at CPD, said that long-term planning is needed to introduce inheritance tax in the country. At the same time, he emphasized the possibility of double taxation and ensuring a transparent framework for determining the value of assets.

The proposal has not yet been finalized. Those concerned said that further review and policy decisions will be taken on the matter before it is presented in the budget.