Express (August 06, 2011)
Taxpayers will be exempted from scrutiny relating to source of their declared undisclosed income under income tax law only. Other government agencies will be free to ask questions on such funds, tax officials said.
The National Board of Revenue (NBR) is set to bring a change in its Statutory Regulatory Order (SRO) on undisclosed money by clarifying the law, they said.
However, the taxmen will not disclose information of the taxpayers to other agencies, including the law-enforcers, as the tax-law clearly bars them from doing so.
The move of the revenue board came following deep concern expressed by the Asia-Pacific Group on Money Laundering (APG) regarding acceptance of all types of undisclosed income, earned legally or illegally, without raising any question irrespective of all laws.
Bangladesh, as a member country of the APG, is bound to follow the international rules on checking money laundering. The APG is an autonomous and collaborative international organisation, founded in 1997 in Bangkok, Thailand, consists of 41 member countries and a number of international and regional observers.
The APG gets support from some key international organisations including the Financial Action Task Force, the International Monetary Fund (IMF), the World Bank (WB), the Organisation for Economic Co-operation and Development (OECD), the United Nations Office on Drugs and Crime, the Asian Development Bank (ADB) and the Egmont Group of Financial Intelligence Units.
Talking to the FE, a senior government official said rules of the government's money whitening scheme went against the APG guidelines.
"The APG is working to check money laundering. But if the government accepts all undisclosed income without question, it might
be difficult for the group to work properly," he said.
Through the amendment of the NBR's SRO, the Anti-Corruption Commission (ACC), money laundering monitoring wing and other government agencies can ask questions on source of any money including the declared undisclosed money.
Tax officials said the existing income tax law, offering the opportunity of legalising undisclosed money, exempted undisclosed income from taxmen's scrutiny. However, the law did not mention anything for other entities that created confusion.
Money earned through various illegal means or corruption can be checked by other entities using their respective laws, said a senior tax official.
He said the APG requested the NBR to clarify the tax law whether other agencies are allowed to ask question on declared undisclosed money or not.
In the budget for the current fiscal year (FY), 2011-12, the government has offered the opportunity of declaring undisclosed income through making investment in stock market and government bonds by paying 10 per cent tax.
Talking to the FE, Zaid Bakht, a noted economist and research head of the Bangladesh Institute of Development Studies (BIDS), said people might not be interested to declare their undisclosed income under the new provision.
"Most of the people, who have undisclosed income, might disclose their income, if it is exempted from all types of scrutiny," he said.
People will be discouraged, if other government agencies ask question on their undisclosed income, he added.
During the last few years the government failed to collect any significant amount of revenue by offering the opportunity.
Some 1,923 taxpayers availed the facility in the 2009-10 FY. They paid Tk 1.21 billion tax against legalisation of Tk 9.22 billion undeclared income.
In the 2007-08 FY, the government collected Tk 8.03 billion tax against Tk 88.95 billion undisclosed money of 16,664 taxpayers.
In the 2008-09 FY, some 14,254 taxpayers declared Tk 7.87 billion undeclared money, paying Tk 1.08 billion tax.
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