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Bank & Finance - Corporate - May 31, 2022

Black money to legalize in next budget

Economists term it ‘budget capture’

Industry Desk: Laundered money and assets abroad can be legalized by paying 10 per cent and 15 per cent tax respectively without questioning by any government agencies.
The government is going to introduce such special opportunities in a bid to bring back laundered money in the country to enhance investment and employment. Economists have strongly opposed this planned concession as it discourages honest investors with serous injustice to domestic investors who pay tax to the state.
“The amount of money that will be brought into the country can be legalized with only 10 per cent income tax, without any questioning regarding source of income by Anti-Corruption Commission (ACC), National Board of Revenue (NBR) or Bangladesh Financial Intelligence Unit (BFIU),” a senior official at the Finance Division told yesterday.
The official, who spoke on condition of anonymity because of sensitivity, confirmed what Finance Minister Mustafa Kamal told reporters last week.
Meanwhile the finance minister instructed the budget officials to include such an opportunity in the upcoming national budget for FY2021-22.
The budget proposals will be placed in the Parliament on June 9, 2022.
Dr Debapriya Bhattacharya, Distinguished Fellow, CPD told UNB that this initiative is totally immoral, unlawful and against the socio-economic development philosophy of Bangabandhu Sheikh Mujibur Rahman’s Awami League.
Before introducing such a provision in the national budget, the government should shut down the regulators including ACC, NBR and BFIU, he said.
Debapriya termed it as “budget capture” by the crony influential who accumulated money in the country illegally and smuggled it out of the country illegally, and now being allowed to legalize this ill-gotten wealth located abroad by paying a nominal tax.
“This is a perverse joke with thousands of honest tax payers and hardworking entrepreneurs of the country,” said the eminent economist.
“Such an evil philosophy would neither contribute in decent tax mobilisation nor for generating productive investment. This will only help those who are now being hounded overseas for their assets as they cannot show that these assets that have been procured through legal means,” he added.
Dr. Muhammad Abdul Mazid, former NBR Chairman said that this initiative will worry those who are paying around 30 per cent tax on their legal income.
He said the tax rate on illegal income should not be below the regular tax rate in the country considering moral blow to the honest tax payers.
To take this opportunity, a person can mention the amount declared in his annual income tax return. In other words, the smugglers or laundered black money can be legalized by paying tax at the prescribed rate.
If anyone has movable and immovable property abroad in addition to cash, he can show that property in his income tax return. No question will be asked if 15 per cent tax is paid for this, sources said.
This opportunity will be given from July this year to June 30, 2023. That money can be brought to the country through banking channels. In this case, the government has to be paid 10 per cent tax before the money is deposited in the account.
At present, there is an opportunity to whitening black money with a penalty of 25 per cent on cash, bank deposits, stock market, and savings certificates with additional 5 percent tax. Apart from this, the government is going to give an opportunity to legalize the money laundered in the upcoming budget.

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