10pc tax likely to invest in new factories
The amnesty to legalize undisclosed income without any questions and on payment of a 10% tax is expected to continue over the next fiscal year for people who make a new investment to set up factories, officials said.
Nearly 50 proposed measures related to income tax and value added tax could see changes when the 2021 finance bill is passed in parliament on June 29.
The government offered holders of undisclosed income to launder their assets without questioning the source from any authority, including the Anti-Corruption Commission, at the start of the current fiscal year 2020-2021.
The special opportunity was granted in three categories, including undeclared cash, bank deposits, cash vouchers, stocks and bonds. A person could legalize the money by paying 10 percent tax on the amount stated in the tax return.
The perimeter can be kept during the coming financial year. But beneficiaries may have to pay a higher rate of 25 percent.
As a new measure, the benefit of laundering black money by paying only 10 percent tax will likely be limited to establishing new factories. The investment will have to be made in the next fiscal year, finance ministry officials said.
The government could include a new provision for black money holders, allowing them to legalize wealth by investing in the health and agricultural sectors. This measure aims to increase tax collection and encourage investment to create jobs.
In the outgoing fiscal year, people were allowed to invest in the capital market by paying 10% tax on the value of the investment for at least one year.
The government can maintain the facility, but the tax rate can be set at 25 percent.
In FY21, people were allowed to report any undisclosed property, including houses, land, buildings or apartments, paying a 10% tax. The special treatment is expected to continue and the tax rate may remain unchanged.
Due to the global money laundering opportunity, a record Tk 14,460 crore of undisclosed assets was legalized in the first 11 months of FY21, according to the National Board of Revenue.
Among other changes, the government can reduce the VAT rate for air-conditioned hotels and restaurants (AC) from 15% to 10% and from 7.5% to 5% for non-air conditioned hotels and restaurants.
On June 12, restaurateurs called on the government to reduce VAT, given the devastating impact of the pandemic on the sector.
Hotels and restaurants employed 22.8 lakh people in 2019-2020, according to the Bangladesh Bureau of Statistics’ 2020 Hotel and Restaurant Survey.
The government can raise the cap for businesses to make mandatory use of formal channels such as banks and mobile financial services to conduct monetary transactions.
The proposed budget made it compulsory to transfer funds of more than Tk 50,000 through formal channels. The new limit could be Tk 5 lakh.