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.