Income tax bill targets wealth stashed abroad

People with properties abroad stand to face a penalty equal to their fair market value if the tax office can detect those, as per the Income Tax Bill 2023.

Drafted in Bangla, the bill, which was placed in the parliament yesterday by Finance Minister AHM Mustafa Kamal, will replace the existing Income Tax Ordinance 1984.

The tax officials will also be able to run enquiries at home and abroad if they have logical grounds to believe that the individuals are stashing their wealth outside of Bangladesh.

Not just that, the National Board of Revenue will be able to realise unpaid taxes by selling the properties abroad even if the assets are owned by another person on behalf of the taxpayer.

The proposed law authorises the NBR to take appropriate actions as it thinks fit and makes it mandatory for those with properties abroad to file assets and liabilities statements.

On paper, the proposed law can deter money laundering. Whether it succeeds depends on the supporting measures taken to make the law robust.

The law has been framed to ease the process of doing business and cut the number of returns that companies need to file from 29 to 12, Kamal said.

"The bill seeks to reduce the discretionary powers of tax officials as much as possible."

The proposed law has incorporated international best practices to ease tax compliance and file tax returns, Kamal said, adding that it will also thwart prevent tax avoidance from taking place through various types of arrangement.

Filing tax returns and proof of submission would become mandatory for availing 43 government services, up from 38 at present.

The draft law has expanded the scope of submission of income tax returns under self-assessment.

Taxpayers will not need to seek additional time should they fail to file returns beyond November 30. But they will face a penalty, said a senior official of the NBR.

The simplified refund process will enhance trust in the tax system since the tax refund will be credited directly to the taxpayer's bank account, said Snehasish Barua, director of SMAC Advisory Service.

The bill though calls for a higher rate for tax deducted at source (TDS). This will push up the cost for businesses since most of the TDS is considered as minimum tax, he said.

The bill has been sent to the parliamentary standing committee on the finance ministry for security. The committee has been asked to submit its report within five working days.