ACC supports scope for whitening black money
Doulot Akter Mala | Wednesday, 15 June 2016
Country's anti-graft body sees the legal window for mainstreaming undisclosed income on payment of penal tax as a major tool for brining a large chunk of grey economy in the formal channel.
The stance of the Anti-Corruption Commission (ACC), however, runs counter to opposition from rights bodies and watchdogs on graft, including Transparency International's Bangladesh chapter.
In a letter to the National Board of Revenue (NBR) the ACC noted that the revenue authority was not getting desired results from the offer for a lack of awareness among people about availability of the opportunity.
The ACC letter, sent by its secretary Abu Mohammad Mostafa Kamal to the NBR chairman, suggested launching an awareness campaign on the opportunity available for what is commonly called whitening black money.
Earlier, civil society, economists and Transparency International Bangladesh (TIB) strongly criticized the existence of the opportunity for legalising undisclosed income in the proposed budget for fiscal year (FY) 2016-17.
Talking to the FE Tuesday, TIB executive director Dr Iftekharuzzaman said the scope of legalising the unaccounted-for income contravenes the constitution.
"It is also unjust to the honest taxpayers. There is no positive economic side of the opportunity," he said.
"The government is offering the opportunity almost every year during the last 18 years, but how much undisclosed money got mopped up with the offer?" he questioned.
In the proposed budget for the upcoming fiscal year (FY) the government has kept unchanged the provision of legalising undisclosed income on payment of penal tax.
According to NBR data, only 222 untaxed money holders got Tk 6.76 billion legalised in the FY 2014-2015 through investment in income-generating sectors by paying 10 per cent penalty along with regular tax. And the NBR received only Tk 275 million in income tax.
In the letter, the ACC said the provision of legalising undisclosed income in the income tax ordinance is appreciable.
"The opportunity is contributing to the combating of corruption in the long run. Without such rules, undisclosed income will not come in the formal channel of the economy and that money could be used in different illegal activities," the ACC letter reads.
Generally, it has been noticed that many people fail to show their legally earned money in the income tax return in right time for a lack of awareness and institutional constraints, it said.
Undisclosed money is also generated at the time of purchase and registration of flats, the ACC explained.
"People are not clear about the provision of the income tax ordinance. For this reason, the tax authorities are not getting desired benefit from the rules," it said in support of its call for campaign.
According to the income tax ordinance 19BBBBB, people can invest their undisclosed income without facing any question from the taxmen while purchasing flats in city's Gulshan, Banani, Uttara, Dhanmondi, Lalmatia and other posh areas. They can get undeclared money legalised by paying on average Tk 5,000 in income tax per square metre. The income tax authority will consider the tax as finally paid tax on their undisclosed income.
In case of purchase of more than one house or flat, undisclosed money holder can pay 20 per cent higher tax than that of the previous amount to legalise their income.
Income tax ordinance 1984, section 19 C, bears a provision for purchase of bond of Bangladesh Infrastructure Finance Fund (BIFF) through investment of undisclosed money.
In the section 19 E, there is a provision of voluntary disclosure of income by the undisclosed money holders. They can invest such money in any productive sector by paying 10 per cent tax in addition to normal tax rate.
The ACC secretary in the letter urged the NBR to make people aware on availability of the opportunity to bring the undisclosed money in the formal channel of economy.
Tax officials said the provision of voluntary disclosure of income is incorporated into the income tax ordinance and is a part of income tax law. Earlier, the NBR used to offer the opportunity through issuing special Statutory Regulatory Order (SRO).