A customs department report has found the country to be in the risky zone in terms of money laundering under the cover of overseas trade.
The report blamed two factors – high corporate tax and absence of good governance – for the scenario.
It said the two factors are stirring up money laundering here. The customs department of the National Board of Revenue (NBR) prepared the report focused on transfer pricing.
The report cited studies of several international agencies to shed light on the money laundered abroad through false declarations in overseas trade. It said a huge amount of customs taxes and capital is making its way into other countries illegally.
According to the report, the issue of money laundering has now been a hot topic in the country. Apart from false declarations, the hundi business is also responsible to a good extent for it.
There are allegations that a section of unscrupulous businessmen, industrialists, politicians, bureaucrats and other influential ones set up businesses abroad with the money laundered from home. Also, there are reports of buying luxurious homes and flats in different countries, including the United Arab Emirates (UAE), Canada, and Malaysia.
The report cited studies of several international agencies to shed light on the money laundered abroad through false declarations in overseas trade. It said a huge amount of customs taxes and capital is making its way into other countries illegally
The customs department report cited an assessment of the United Nations Development Programme (UNDP) to claim that a total of USD 34.8 billion went abroad from Bangladesh in 18 years until 2008. It implies that an amount of USD 1.8 billion was laundered abroad each year during the 18-year time span when Bangladesh topped among the least-developed countries (LDCs) in terms of money laundering.
The report also incorporated Global Financial Integrity (GFI) findings and said the evil practice went downhill after 2008 as an average of USD 7.53 billion was laundered through false declarations in export-import trade each year in the following decade.
The customs department also said the multinational giants are taking money abroad in different ways, including export-import trade. In overseas trade, there are two methods of money laundering - over-invoicing and under-invoicing.
The National Board of Revenue (NBR) has been very vocal to contain money laundering and to bring back the laundered money for the last decade. It formed the transfer pricing cell (TPC) and introduced a provision to punish the money launderers with jail and fines.
Meanwhile, the government incorporated a special facility in the current budget allowing the legalisation of laundered money with a tax of 7 per cent.
TPC gains no momentum in eight years
The government legislated the transfer pricing act in 2012 to look into money laundering and tax evasion through false declarations in the export-import trade.
The NBR formed the transfer pricing cell (TPC) in 2014. The income tax department already started working in this regard but the customs department failed to do so. Recently, an official has been recruited to the customs department’s transfer pricing cell.
Masud Sadik, a member of NBR (customs policy) said, “We could not advance like the income tax department. Recently we appointed an officer and he is now collecting data on the working techniques in different countries. We are still at the initial phase.”
Several countries have succeeded to keep the evil practice in check through the transfer pricing cell. India introduced the transfer pricing act in 2001 and collected an additional revenue of USD 5 billion from the fiscal year 2001-02 to 2005-06. China collected more than RMB 2.5 billion each year since 2010.
No response to special facility
The government allowed bringing back the laundered money with a tax of 7 per cent and declared that none of its agencies, including the NBR, the Anti-Corruption Commission (ACC), would raise any questions over the offshore assets.
The facility will be in place until 30 June, but no one took the privilege in the first six months of the current fiscal.
Earlier, the government amended section 16 (h) of the income tax ordinance in the budget for the financial year 2020-21. The amendment offered a privilege to legalise the money laundered through under-invoicing and over-invoicing with a tax of 50 per cent.
But no one took the facility in the last two and a half years.