Now amnesty in the offing to bring back laundered money

The government is going to offer Bangladeshis a scope for legalising their unreported assets outside the country without facing any question in the next fiscal year, subject to paying taxes ranging from only 7% to 15%.

The offshore tax amnesty will help to lure back the money syphoned off the country, said finance ministry officials. The privilege will remain in force for a year till June 2023, according to the FY23 budget proposal to be placed in parliament on 9 June. 

Undisclosed assets holders will be allowed to show any of their immovable assets outside Bangladesh in tax returns by paying a 15% tax.

In the case of legalising any movable assets, including cash, bank accounts, securities and financial instruments without repatriation to Bangladesh, they will have to pay a 10% tax, according to senior finance ministry officials in the know about the development.

Besides, any cash, bank deposits, bank notes, bank accounts, convertible securities and financial instruments, if repatriated to Bangladesh, will be taxed at a rate of 7%.

The tax amnesty will allow owners of such assets and cash to get into tax compliance and avoid fines, penalties and criminal charges.

As per the existing Money Laundering Prevention Act, any person who commits or abets or conspires to commit the offence of money laundering shall be liable to be punished for a minimum of four years and maximum of twelve years of imprisonment. In addition to that a fine equivalent to twice the value of the property involved in the offence or Tk10 lakh, whichever is higher, shall be imposed.

Some 17 countries, such as Australia, Germany, Belgium, Italy, Spain, Indonesia and Pakistan, are offering offshore tax amnesty to bring back unreported assets held abroad in tax havens and secret bank accounts.

Talking to The Business Standard, former adviser to a caretaker government Mirza Azizul Islam said, "The amnesty to undisclosed asset holders outside the country is meaningless. It is neither ethically correct nor will it bring any benefit to the economy as such scope did not yield positive results in the past."

The move will rather discourage real taxpayers, he added.

Rizwan Rahman, president at Dhaka Chamber of Commerce and Industry, said, "Offering amnesty from prosecution to those who did not report their assets will be unfair to large taxpayers from the business sector, who account for 38% of revenue collection."

Abul Kasem Khan, trustee board member at BUILD Bangladesh said such amnesty to legalising unreported foreign assets can help the government increase its forex reserve in this crisis period. But it is not morally right.

"Regular taxpayers should be allowed to park their money in foreign accounts, if necessary," he noted.

Existing policy of legalising undisclosed money

In the current fiscal year, the untaxed money can be invested in the stock market, subject to paying a 25% tax plus a 10% penalty on the payable tax.  There is also an opportunity to legalise undisclosed property, such as flats, bank deposits and savings instruments on similar conditions. Some Tk200-Tk6,000 for per square metre depending on sizes and locations needs to be paid in the case of a flat legalisation, alongside the penalty. 

Besides, black money can be invested in bonds, economic zones and hi-tech parks on the payment of a flat 10% tax.