The government has offered a one-time opportunity to legalise assets, moveable or immovable, acquired abroad paying a nominal tax, ranging between 7.0 per cent and 15 per cent. No question will be asked about the source of funds used to acquire assets.
Finance Minister AHM Mustafa Kamal, while unfurling the national budget for next fiscal Thursday, proposed the new money-whitening scheme, which has already drawn criticisms from economists and a section of businesspeople.
He proposed to interpolate the new provision into the Income Tax Ordinance 1984 so that money earned and assets acquired abroad can be mainstreamed into the national economy.
The existing special provision for whitening black money, offered in the budget for the outgoing fiscal year, by paying higher taxes has been scrapped in the proposed Finance Bill 2022.
Instead of the prevailing measures the finance minister proposes the new one -- evidently in the wake of financial crunch at home and worldwide -- with a view to creating a flow of fresh funds and investment for stimulating economic activities.
According to the proposed provision, no authority, including the income-tax authority, shall raise any question as to the source of any asset located abroad if a taxpayer pays tax on such asset.
The rate is 15 per cent of fair market value of assets for immovable property not repatriated to Bangladesh, 10 per cent for movable property not repatriated to Bangladesh and 7.0 per cent for cash and cash equivalents repatriated to Bangladesh.
"Fair market value of asset shall be declared by the assessee and in no case is less than the cost of acquisition of asset," says the bill.
This opportunity will be in force for the period starting from the first day of July 2022 and ending on the thirtieth day of June 2023.
"The proposed provision, when implemented, will increase the flow of foreign currency to our economy, increase income-tax revenue, and the taxpayers will also feel relieved by availing this opportunity to declare their assets and money acquired or earned abroad in their respective income-tax returns," it is stated in the proposed finance law.
In the Finance Bill 2022, special money-whitening scheme in capital market, cash, and debenture and other securities, building apartments, under section 19AAAA and 19AAAA has been scrapped while new provision 19F incorporated.
Under the 19F on "special tax treatment in respect of undisclosed offshore assets -- notwithstanding anything contained in this ordinance or any other law for other law for the time being in force -- no question as to the source of any undisclosed asset located outside of Bangladesh shall be raised by any authority if an assessee pays, before the submission of return of income applicable for the assessment year 2022-23, tax at the rate specified in the following table," the bill reads.
Bank responsible for crediting to the account of assessees shall deduct 15-percent tax in accordance with the provision before crediting and give a certificate of such deduction to the assessee having any immovable asset located overseas.
For movable assets, including cash or cash equivalents, bank accounts, securities and financial instruments, tax has to be paid by pay order or by automated chalan.
However, the opportunity would not be applicable to taxpayers facing proceedings on account of tax evasion or criminal activities by June 30, 2022.
For legalising income, taxpayers have to submit revised or amended form of tax returns declaring the undisclosed income by June 30, 2023.
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