Govt takes aim at wealth stashed abroad
The generous tax amnesty campaign proposed by Finance Minister AHM Mustafa Kamal for those with undisclosed assets abroad has been pared back in the face of harsh criticism from all quarters.
Gone are the proposed provisions to legalise both movable and immovable assets abroad acquired with undeclared income from Bangladesh by paying a penalty in the amended finance bill that was presented in the parliament yesterday.
Only the option to repatriate cash squirrelled away in foreign shores through the banking channel by paying a 7 percent tax remains.
Side by side, a seemingly stricter clause has been added to crack down on resident Bangladeshi money launderers.
If a Bangladeshi resident has assets abroad and has not disclosed them in the returns, the deputy commissioner of taxes can slap a penalty equivalent to the fair value of the asset.
"The Deputy Commissioner of Taxes shall have the authority to recover the penalty under this section by confiscating or selling any asset held by or on behalf of the assessee," says the amended Finance Bill 2022.
If the assessee is suspected of hiding the assets abroad in the returns, the deputy commissioner of taxes will have the authority to open an investigation.
Whether the fresh provision will work in practice remains open to debate, according to experts.
"This is purely academic -- there is no enforcement mechanism for it," said Zahid Hussain, a former lead economist of the World Bank's Dhaka office.
There has been no arrangement with countries on information-sharing, which renders the new clause ineffectual.
"This is somewhat of an eyewash," Hussain added.
This maiden tax amnesty campaign geared towards undeclared wealth stashed abroad should have been scrapped altogether, said Ahsan H Mansur, executive director of the Policy Research Institute.
"It is good that two of the three provisions have been withdrawn. All three should have been scrapped as this campaign's effectiveness is doubtful."
However, the authority extended to the National Board of Revenue to investigate cases it suspects have undisclosed assets stashed away abroad looks handy on paper.
"If the NBR can pursue it in good faith and set examples in a clean way, it would be beneficial in cracking down on tax evasion and money laundering," said Mansur, also the chairman of Brac Bank.
The amended finance bill accommodated another feedback, and this time it was from the business community.
In the proposed finance bill placed in the parliament on June 9, the corporate tax for non-listed companies was slashed by 2.5 percentage points to 27.5 percent provided the banking system is used to accept all income and receipts as well as for expenses and investments of more than Tk 12 lakh.
Businesses found the Tk 12 lakh threshold impracticable and hence the benefit of the reduced corporate tax would evade them.
Now, in the amended finance bill, the ceiling for cash transactions has been raised from Tk 12 lakh to Tk 36 lakh.
In another amendment, the supplementary duty of cars of 2,001-3,000cc has been increased from 200 percent to 250 percent and for cars from 3,001-4,000cc from 350 percent to 500 percent.
"I have accommodated 17 of the suggestions made by the members of parliament on the budget. Were the economic conditions normal, more of their observations would have been there," Kamal said.
He also said Bangladesh saw the highest increase in GDP in the world between 2009 and 2019: 188 percent. China's GDP expanded the next highest in that period: by 177 percent.