Assets held abroad not mentioned in tax files

Two years ago, the National Board of Revenue (NBR) allowed taxpayers to disclose details on their assets held in foreign countries in the income tax statement, but no taxpayer in the country ever mentioned details on foreign assets including homes and vehicles.

Though no assets held in foreign countries have been shown, many powerful tycoons, politicians and bureaucrats own various properties including homes and vehicles in foreign countries. Local and foreign media have been reporting about such properties. Yet, the tax officials are not looking into assets held abroad.

The NBR had kept no window for taxpayers to disclose their assets held aboard in the tax statement for the past 50 years since the independence. The government of the time added provisions on the disclosure of assets held aboard in the national budget in 2022. The governments also offered scopes to legalise the money that has been laundered abroad by paying a certain amount of tax and no question will be raised on it. However, none ever took this opportunity.

In the meantime, local and foreign media reported on various assets including houses and cars of former ministers and politicians and businessmen abroad. This list former land minister Saifuzzaman Chowdhury Javed, controversial businessman S Alam (Saiful Alam) and his family, former prime minister's advisor Salman F Rahman, former foreign minister Hasan Mahmud, former lawmaker of Awami League Abdus Sobhan Miah (Golap), Bashundhara Group chairman Ahmed Akbar Sobhan and his family, Nassa Group Chairman Nazrul Islam Majumdar, former army chief General (retd) Aziz Ahmed, former inspector general of police Benazir Ahmed, Dhaka Metropolitan Police’s Detective Branch head Md Harun-Or-Rashid, controversial businessman Chowdhury Nafiz Sarafat and others. Assets owned by these individuals have been traced in various countries including the UK, the US, Canada, United Arab Emirates, Singapore and Malaysia. According to sources of NBR’s tax department, the income tax statements of these individuals have no information about assets held abroad.

Former lead economist of World Bank, Dhaka office Zahid Hussain told Prothom Alo nothing was gained even after offering opportunities to disclose assets held abroad in income tax statement. In fact, many individuals amassed wealth by laundering money from home and they took this money gained by means of corruption to foreign countries to keep it safe. Once they disclose assets held abroad in income tax statements, they might face trouble in future; so, these individuals do not mention it in tax files, he added.

According to responsible sources at NBR, former Bangladesh Bank governor Abdur Rauf Talukder, former Prime Minister's principal secretary Ahmed Kaykaus and former chairman of NBR Abu Hena Md Rahmatul Munim moved to amend the income tax law aimed at disclosing assets held abroad and repatriating the wealth home. Several businesspersons even promised to bring back the laundered money. These three former movement officials negotiated the matter. The income tax law was amended based on the businesspersons’ commitments, but they were never keen to bring back the laundered money home.

A taxpayer submits an annual tax file to NBR providing information on income, expenses and wealth. A breakdown of income from various sectors is mentioned. Form 10(B) contains details on wealth. A person holding wealth worth over Tk 5 million at home and abroad mandatorily submits a wealth statement, and column no. 9 of the form 10(B) mentions details on assets held in foreign countries.

According to tax officials, several factors discourage taxpayers not to reveal assets held abroad. Firstly, dual tax might be imposed on the same assets. Secondly, if assets bought with laundered money are disclosed government agencies like the Anti-Corruption Commission and Bangladesh Bank might come after the individuals. Thirdly, it is safer to show wealth amassed in foreign countries in the tax files of the respective country, and there is no obligation to show this asset in tax files in the country.

Many Bangladeshis took citizenship or settled permanently in many countries including the US, Canada and Malaysia through family connections or investment schemes. To date, 3,604 Bangladeshis took the opportunity to settle permanently in Malaysia under the second home scheme of the Southeast Asian nation.

Similarly, Many Bangladeshi businesspersons settled permanently in Canada and Singapore under investment schemes. Money is siphoned off to those countries through various ways including hundi and trade misinvoicing. A large portion of bureaucrats also took citizenship of other countries by laundering money amassed illegally.

Various countries facing troubles over tax evasion and money laundering by dual citizenship holder have taken initiatives to trace assets held in other countries and collect taxes. India and Pakistan offer special facilities allowing citizens to disclose assets held aboard in tax files in 2019.

India’s Central Board of Direct Taxes (CBDT) offered scope to reveal assets held aboard for the first time in the 2018-29 fiscal. Indian missions in various countries also operate an Income Tax Oversees Unit (ITOU) led by a tax officer with the rank of first secretary to trace the income and wealth of Indian citizens aboard.

Besides, the Internal Revenue Service allows US citizens to declare their assets held aboard. The US passed the Foreign Account Tax Compliance Act (FATCA) in 2010 to inquire about any US citizen holding funds or wealth worth over USD 50,000 at any financial institution across the globe. The US receives over additional tax of USD 800 million under this initiative every year.

This report appeared in the print and online editions of Prothom Alo and has been rewritten in English by Hasanul Banna