Amid much criticism, the Jatiya Sangsad on Wednesday passed the Finance Bill with some changes keeping only one of three proposed offshore amnesty tax facilities, allowing repatriation of any undisclosed asset by paying a 7% tax, while removing the options of keeping wealth abroad by paying a minimum tax.
Under the approved changes, if the offshore assets of an individual taxpayer are not disclosed and are later discovered, the government might slap a fine tantamount to the value of the concealed assets.
In such a case, any local assets of the taxpayer concerned might also be confiscated and auctioned by the government.
The Finance Bill, which gives effect to the new taxation, has also eased the conditions to avail 2.5% corporate tax cut facility.
At the same time, the condition of submitting proof of returns for companies and firms was relaxed. This, however, will not be applicable for individuals.
Furthermore no penalty can be imposed on failure to submit returns without giving a reasonable opportunity of being heard.
According to the Finance Bill 2022 which was passed into the act yesterday, to avail the offshore tax facility, Bangladeshis can repatriate any cash, bank deposits, bank notes, bank accounts, convertible securities and financial instruments by paying a 7% tax.
The tax amnesty will allow owners of such assets and cash to become tax compliant and avoid fines, penalties and criminal charges.
The act said, "The provisions of this section shall not apply to cases where any proceeding has been drawn on account of tax evasion or criminal activities under any provision of this Ordinance or any other law by thirtieth June, 2022."
In the budget for 2022-23 fiscal year placed on 9 June, Finance Minister AHM Mustafa Kamal had proposed allowing Bangladeshi citizens to legalise any movable assets, including cash, bank accounts, securities and financial instruments without repatriation to Bangladesh by paying a 10% tax.
The budget proposal had also said undisclosed asset holders would be allowed to show any of their immovable assets outside Bangladesh in tax returns by paying a 15% tax. This proposal was also not included in the final budget for FY23.
As the proposal immediately met with criticism from economists and professionals on moral ground, the finance minister in the post-budget press conference had defended the move saying it would give money launderers an opportunity to bring their unreported offshore assets back to home and add those to the mainstream economy.
Corporates get some reprieve
The Amended Finance Act 2022 relaxed the total cash transactions a company can do in a year from the proposed Tk12 lakh to Tk36 lakh to get a 2.5% corporate tax cut facility. Of this Tk36 lakh, the government also added a Tk5 lakh limit on a single transaction.
At the same time, all the transactions above Tk36 lakh have to be done through banking channels, which was termed traceable channels in the proposed budget.
This will be applicable for listed companies, non-listed companies and OPC (one person companies).
If the companies fail to comply with the aforementioned cash transaction limitations, then the tax rate for listed companies will be 22.5%, non-listed 30% and OPC 25%.
Publicly listed companies will also have to offload more than 10% of their shares as proposed in the budget.
In the final budget, companies and firms no longer have to provide proof of submission of tax returns, but can instead furnish a system generated certificate containing name and the Taxpayer's Identification Number (TIN) in the year they are incorporated, registered or formed and the following year. But proof of tax return will become mandatory from afterwards.
In the proposed budget, the deputy commissioner of taxes could institute a fine not exceeding Tk10 lakh for any non-compliance of any tax rule, but the final budget says no penalty can be imposed without giving a reasonable opportunity to any offender to be heard.
Finance Minister AHM Mustafa Kamal said they accepted 17 recommendations put forward by the members of parliament, but could not accommodate 86 others.
Expressing his regret over the matter, he said the uncertain economic conditions made it difficult to fully evaluate those proposals.
Meditate in peace, again
The proposed budget had mulled slapping a 15% value-added tax (VAT) on meditation services and withdrawing its exemption status, but in the final budget has kept the VAT at 5%.
Furthermore, there was a demand that 5% VAT on each level on the chain of supply of mobile phones be removed, but the final budget did not make any change to this end.
The VAT on imported elevators in the final budget has been revised down to 15%, including duty tax, instead of the proposed 31%. Earlier, it was 11%.
A 15% VAT has been re-imposed on the bitumen import stage, with the decision taken to benefit local bitumen producers.