‘Ethically unacceptable’

Money laundered out of the country can be legalised in exchange of 7 to 15 percent tax under a new proposal aimed to boost revenue as well as mobilise foreign currency. 

Finance Minister AHM Mustafa Kamal yesterday proposed the amnesty to undisclosed assets or cash stashed in foreign shores, which the economists term "ethically unacceptable" as it would encourage more money laundering.

The new move has the proposition that no question would be raised by any authorities, including the tax administration, about the source of any undisclosed assets located outside Bangladesh if a certain amount of tax is paid.

The opportunity will remain effective from July this year to June next year if the proposal is passed.

The government, however, will discontinue the opportunities of whitening black money amassed in the country.

Under the new proposal, Bangladeshi citizens who have immovable assets bought outside the country with undeclared income from Bangladesh can legalise those by paying 15 percent tax.

Citizens who have any movable assets, including cash or cash equivalents, bank accounts, securities and financial instruments, squirrelled away in foreign shores can legalise those by paying 10 percent.

And those who have any cash or cash equivalents, bank deposits, bank notes, bank accounts, convertible securities and financial instruments squirrelled away abroad can bring them back home by paying 7 percent.

In his budget speech, Mustafa Kamal hoped that the proposal would increase the flow of foreign currency and increase 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,'' he added.

The minister stressed the need for adopting and implementing a visionary fiscal policy aiming at generating more revenue to face the tough challenges in the coming fiscal year, as the coronavirus outbreak and the ongoing unstable situation in certain parts of the world raise the fear of global recession.

The new move comes also when the country's forex reserve is under pressure due to the rising import payments amid global price hikes of commodities.

The economists, however, criticised the proposal.

Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue, termed it a kind of opportunity for whitening black money.

"Whoever took the money abroad obviously did it by violating the existing law of the country through hundi or by other means," he told The Daily Star.

They did it either by over-invoicing or under-invoicing, he added.

"Now by giving these people such an opportunity, what signal are we actually giving to those who work or invest honestly in the country and do not smuggle money?" he questioned.

''What signal are we sending about the issues like the rule of law in the country and zero tolerance to corruption?''

He added, "Such a move is ethically unacceptable."

Assuming that it won't yield expected results, the economist said people mostly took the money abroad through corruption and they may not feel comfortable bringing back that money since they might have to face questioning in the future.

Binayak Sen, director general of Bangladesh Institute of Development Studies, said with introducing this provision, it has been indirectly acknowledged that a huge amount of money is held up by Bangladeshis abroad.

In terms of growth, it is a good step since inflow of any sort of resource from abroad would be in the use for investment in the country, he said.

But, he added, it may encourage people to make black money to a great extent and send that abroad since they would have the opportunity to legalise the illegally earned money later.