15% tax proposed to legalise undeclared wealth

People with undeclared wealth are set to receive another reprieve in the proposed national budget for the fiscal year 2024-2025. Authorities will not be able to raise any questions if taxpayers pay fixed tax rates for immovable properties such as flats, apartments, land, securities, and other assets, thereby allowing them to legalise their undeclared wealth easily.

Finance Minister Abul Hassan Mahmood Ali presented the proposed national budget of Tk 7,97,000 crore in the parliament on Thursday.

Companies are also given an opportunity to legalise their undisclosed assets by taxing them at a fixed rate.

According to the proposed budget, no authority can raise any questions if taxpayers pay fixed tax rates for immovable properties like flats, apartments, and land, and a 15 per cent tax on other assets, including cash, irrespective of existing laws.

The Finance Bill 2024 sets various tax rates on land and non-exhibited buildings, houses, flats, apartments, or use of floor space.

The finance minister said at the JS, “Due to unavoidable reasons, including ignorance of the taxpayer in filing the return, there may be errors in showing the acquired assets... I propose to add a clause on tax incentives in the Income Tax Act to provide taxpayers with an opportunity to correct this error in their income tax returns and to increase the flow of money into the mainstream of the economy.”

He also emphasised the need to keep the country's economy dynamic amid the ongoing global crisis. “In order to generate and sustain effective demand in the economy, we need to provide more revenue on one hand to generate sufficient public spending and, on the other hand, to keep economic activity dynamic in the private sector,” Mahmood Ali said.

“Incidentally, the introduction of the Data Verification System (DVS) has created legal complications in the disclosure of undisclosed income and assets of various companies,” he added.

Two years ago, the government introduced a 10 per cent tax to legalise undisclosed money, but the scheme was cancelled due to a poor response. NBR sources report that a total of 11,839 individuals legalised about Tk 20,500 crore in FY21, the highest single-year total in the country's history. The NBR collected Tk 2,064 crore in revenue from these legalisations.

Transparency International Bangladesh (TIB) Executive Director Dr Iftekharuzzaman has expressed shock and disappointment over the unethical provision in the newly proposed budget that allows legalising undisclosed assets, including whitening black money. He opposed the idea of recognising laundered black money as undeclared income.

TIB fears that the facility to legalise undeclared assets and black money with just a 15 per cent tax will discourage honest and legitimate taxpayers, as no authority will question the assets and money declared under this provision, fostering a liberal environment conducive to corruption in the country.