Money laundering checkpoints set to be erected
The government is expected to tighten tax rules to curb the scope for money laundering through under and over invoicing of exported and imported goods and through fictitious or inflated investment, said a finance ministry official.
From next fiscal year, taxpayers will face a hefty fine if they inflate values of goods when declaring investments in their tax returns.
Under the measure, 50 per cent of the difference between the actual value and fake value will be slapped as penalty, said the official.
"We expected that introduction of such penalty will discourage money laundering and unlawful transfer of funds abroad, especially through opening of letters of credit in the name of imports of machinery and others," said the official.
Illegal capital flight continues to strain Bangladesh's ability to finance its development schemes by increasing revenue collection.
The country lost a staggering $7.53 billion on an average per year between 2008 and 2017 to trade misinvoicing during foreign commerce with its 135 trading partners, said Global Financial Integrity Report (GFI) earlier this year.
The loss accounted for 17.95 per cent of Bangladesh's international trade with all trading partners during the period, according to the GFI's annual update "Trade-Related Illicit Financial Flows in 135 Developing Countries: 2008-2017".
There are allegations that many people transfer funds illegally abroad by showing inflated values of imported goods or just in the disguise of making imports.
Many also show fake or higher values of investments in goods to evade tax, said the finance ministry official.
Such practices are expected to drop once the measure, which is likely to be proposed by Finance Minister AHM Mustafa Kamal as part of his overall tax measures for the next fiscal 2020-21, comes into place, said the official.
"This will ensure checks and balances as penalty amount would be high," he said.
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