Legalising Undisclosed Assets: Scope to stay next year
The government will continue to offer the scope for legalising undisclosed money in the upcoming budget, Finance Minister AHM Mustafa Kamal said yesterday.
He said this scope would remain as long as undisclosed money stay undisclosed.
The minister made the comment while replying to queries from journalists at a virtual press briefing following the meeting of the cabinet committee on government purchase.
The government in the current fiscal year gave a wholesale opportunity to legalise black money in a bid to accelerate economic growth during the pandemic.
It introduced a provision that no authority, including the National Board of Revenue (NBR) and the Anti-Corruption Commission (ACC), could question the sources of assets once legalised.
People were allowed to disclose any undisclosed homes, land, buildings, or flats by paying taxes as per the size of the property.
They were able to legalise cash, bank deposits, saving certificates, shares, bonds or any other securities by paying 10 percent in taxes.
They were also allowed to invest in the capital market for at least a year and show the investments in their tax returns.
The minister yesterday said if undisclosed money was not regularised or not brought to the mainstream, the economy would not get proper treatment.
The existing system creates undisclosed money, he opined.
Mentioning that the registration and stamp fees of land are too high while the mouja fees of land are too low compared to the market prices, the minister said there would be no undisclosed money if the exchange rate of actual market prices is shown.
"Both buyers and sellers of land possess undisclosed money due to our system and thus they face problems," he said.
The government is taking measures for gradually reducing the registration and stamp fees of land as well as the income tax rates and trying to keep those rates at the level same as in other developing countries so that everybody can pay, said the minister.
"We hope that the undisclosed money will disappear gradually from our economic system," he said.
When asked whether the existing opportunities in legalising black money would remain the same in the next budget, the minister said it cannot be confirmed at this moment. All need to wait till June 3 to know it, he said.
Since the country's independence, black money worth Tk 30,823 crore has been legalised.
And, a record Tk 14,200 crore of undisclosed assets have been legalised in the first nine months of the current fiscal year.
At least 10,324 people paid Tk 1,439 crore in taxes to legalise such amount of assets.
Of the total legalised asset, a major portion worth Tk 13,860 crore was legalised by paying taxes for undeclared fixed deposit receipts (FDR), saving certificates, cash, and home properties. Out of this amount, 90 percent was in cash, FDR and saving certificates.
While the rest Tk 435 was made legal through investment in the share market and paying taxes.
The previous highest was recorded in fiscal years 2007-08 and 2008-09 during the regime of the army-backed caretaker government. At that time Tk 9,682.99 crore was legalised, according to NBR data.
Zahid Hussain, former lead economist at the World Bank's Dhaka office, told The Daily Star that the scope for legalising undisclosed assets had been on a limited scale before, but the latest one seems quite liberal.
The economist stressed the need for considering the impact of such opportunity on the honest taxpayers who pay a lot more in taxes aiding by the rules.
"Why would the honest taxpayers pay taxes when many legalised their undisclosed assets paying only 10 per cent in tax?" he asked.
Former NBR Chairman Nasiruddin Ahmed said such opportunities are given for the benefit of some individuals and they create conflict between the honest and dishonest taxpayers.
The government should rather rationalise the corporate tax and gradually reduce the existing tax-policy anomalies, including over tax exemptions and multiple tax rates, and these would increase tax collection, he said.
There is a provision in the Income Tax Ordinance for last few year that allows people to legalise their undisclosed income of a year by paying tax and 10 per cent fine in the same year.