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DHAKA, June 29, 2011 (AFP) - Bangladesh will allow billions of dollars of untaxed money to be invested in shares under a new tax amnesty designed to prop up the volatile Dhaka Stock Exchange, an official said Wednesday.
The new legislation, which was approved by parliament late Tuesday, offers an amnesty on so-called "black money" if it is invested in local stocks and shares, tax authority chairman Nasiruddin Ahmed Chowdhury said.
"Undeclared money can be invested in stocks on the payment of a 10 percent tax on the investment," he told AFP, adding that no questions would be asked about the source of the undeclared income.
Tax evasion is widespread in Bangladesh, with a new study by the finance ministry finding that undeclared income or "black money" could account for up to 80 percent of Gross Domestic Product -- some $110 billion.
The new amnesty is designed to attract some of that cash into the Dhaka Stock Exchange, where the benchmark DGEN index has lost some 45 percent of its value since hitting record highs in early December.
"Given the volatility in the stock market, it needs more incentives from the government," Finance Minister A.M.A. Muhith said as parliament approved the new measures.
In recent years, the government has offered tax evaders a string of amnesties to encourage them to declare their money as it seeks to boost the state's income from revenue collection.
Experts have criticised the amnesties, saying they are short term solutions that have not worked in the past.
"This new amnesty will give some short term boost to the stock exchange but it is not a permanent solution to the problems on the Dhaka Exchange," said Mahmud Osman Imam, finance professor at Dhaka University.
Bangladesh is among the world's most corrupt and impoverished countries. Only an estimated one million of its 150 million population pay any taxes.
DHAKA, June 29, 2011 (AFP) - Bangladesh will allow billions of dollars of untaxed money to be invested in shares under a new tax amnesty designed to prop up the volatile Dhaka Stock Exchange, an official said Wednesday.
The new legislation, which was approved by parliament late Tuesday, offers an amnesty on so-called "black money" if it is invested in local stocks and shares, tax authority chairman Nasiruddin Ahmed Chowdhury said.
"Undeclared money can be invested in stocks on the payment of a 10 percent tax on the investment," he told AFP, adding that no questions would be asked about the source of the undeclared income.
Tax evasion is widespread in Bangladesh, with a new study by the finance ministry finding that undeclared income or "black money" could account for up to 80 percent of Gross Domestic Product -- some $110 billion.
The new amnesty is designed to attract some of that cash into the Dhaka Stock Exchange, where the benchmark DGEN index has lost some 45 percent of its value since hitting record highs in early December.
"Given the volatility in the stock market, it needs more incentives from the government," Finance Minister A.M.A. Muhith said as parliament approved the new measures.
In recent years, the government has offered tax evaders a string of amnesties to encourage them to declare their money as it seeks to boost the state's income from revenue collection.
Experts have criticised the amnesties, saying they are short term solutions that have not worked in the past.
"This new amnesty will give some short term boost to the stock exchange but it is not a permanent solution to the problems on the Dhaka Exchange," said Mahmud Osman Imam, finance professor at Dhaka University.
Bangladesh is among the world's most corrupt and impoverished countries. Only an estimated one million of its 150 million population pay any taxes.
Last edited by mark on Wed Jun 29, 2011 11:57 pm; edited 1 time in total (Reason for editing : details added)
