Year after year, opportunities given by the government to whiten black money have failed to attract significant declaration, so the new budget proposes a fresh, lucrative offer — invest and nobody, not even the income tax authority, will be able to question its source.
For the last five years, black money-holders have been able to whiten their assets by investing in residential buildings and other similar properties. This offer was mainly for those who did not declare their full income when filing their taxes for a number of years.
As per the existing law, people with vast amounts of undisclosed wealth could only take advantage of this opportunity if the money was not from an illegitimate source or derived from criminal activities.
An addition was made in the outgoing fiscal year, stating that black money-holders investing in economic zones and hi-tech parks will not face any question about the sources of their income if they invest in the sectors.
For fiscal 2020-21, this amnesty has been widened to cover just about any kind of untaxed income.
Between July 1, 2020 and June 30, 2021 individual taxpayers will be allowed to declare any type of undisclosed property by paying a certain amount of tax for per square foot of the asset.
They will be able to declare undisclosed cash, bank deposits, savings certificates, shares, bonds or any other securities by paying a 10 percent tax.
And they can invest money in the capital market by paying tax at a rate of 10 percent on the value of the investment.
“Nobody, including the income tax authority, can raise any question on such declarations,” said Finance Minister AHM Mustafa Kamal during his budget speech.
“Extraordinary times demand extraordinary measures.”
These provisions will increase the flow of money into the mainstream economy, generate employment and enhance collection of tax revenue, the minister said.
The 10 percent tax levied on black money earned from all sources, including criminal activities like human trafficking and drug dealing, is the same rate that a jobholder earning Tk 58,000 per month will be paying as income tax this year.
The minister, however, is going hard on those earning black money through under-invoicing, over-invoicing or false declarations of investments.
“I propose to insert a new section in the income tax ordinance: 50 per cent tax will be levied on the proven amount of over- or under-invoicing, or on the proven amount of false declaration of investment,” he said.
“Our government has zero-tolerance for such misdeeds.”