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Offshore money-whitening

Scheme set to be scrapped in FY24

FE REPORT | June 02, 2023 00:00:00

The government is set to scrap the offshore money-whitening scheme for the upcoming fiscal year (FY) due to getting zero response to the offer.

In the budget proposal for FY 2023-24, there is no mention of extension of the facility scheduled to expire on June 30, 2023.

Under the scheme, the government has allowed repatriation of cash or cash equivalents, bank deposits, bank notes, bank accounts, convertible securities, and financial instruments into Bangladesh by paying a 7.0-per cent tax.

As per the Finance Act 2022, no authority is supposed to raise any question about sources of the tainted money if it is disclosed under cover of the scheme.

A senior official of the National Board of Revenue (NBR) said the scheme has so far in the outgoing FY failed to get response from any one. Rather, the amnesty has drawn huge criticism in the country, he added.

He said that there is hardly any possibility to extend the controversial benefit for FY '24.

The government received a record highest response since independence to such a scheme in FY 21, with some 12,039 people having mainstreamed their undisclosed income by paying Tk19.80 billion in taxes. Tax rate was 10 per cent, a flat rate, in FY 2020-21.

Under the fiscal measure in the budget for FY 22, undisclosed money holders can avail the money whitening opportunity under three provisions: investment in capital market, land and flats, debenture or other securities.

In the period between 2005-06 and 2019-20, a total of Tk 145.95 billion worth of undisclosed income had been formalised under such amnesty.

However, some of the permanent provisions in the income tax ordinance on disclosing undeclared money may continue like previous FYs.

However, facilities for new industrial undertakings, hi-tech parks and economic zones by paying 10-per cent tax at flat rate may continue.

Hi-tech parks and economic zones investors are allowed to enjoy the facility until June 30, 2024.

Also, there is a permanent provision on voluntary disclosure of income by paying 10-per cent penal tax in addition to the normal rate of tax.

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