MP Bandara correct on tax amnesty being not an amnesty for money laundering

21 October 2021 08:52 am Views - 617

 

MP Shantha Bandara made this statement in the context of the newly passed Finance Act, which grants a tax amnesty to those who voluntarily disclose previously undisclosed taxable income and assets. The MP responded to allegations that the Finance Act enables money laundering by claiming that the Finance Act does not “invalidate” the operation of the Prevention of Money Laundering Act and other laws related to anti-money laundering. 

FactCheck.lk assessed this claim by evaluating the relevant provisions of the Finance Act. 

Part I of the Finance Act grants benefits (immunity from tax penalties, secrecy of disclosures etc.) to those who voluntarily disclose taxable income or assets, which were required to be disclosed by 31 March 2020 under the Inland Revenue Acts of 1979, 2000, 2006, and 2017, and the Value Added Tax Act, i.e., previously undisclosed taxable income and assets.  

However, Section 2(2) of the Finance Act excludes the application of such benefits to any person: i) who is being investigated; ii) against whom a court case is ongoing; or iii) who has been convicted of an offense, in relation to an undisclosed taxable income or asset, under several laws, including the Prevention of Money Laundering Act.

Section 7(1) of the Finance Act states that disclosures made under the Act will be granted secrecy. However, only officers of the Inland Revenue Department are required to maintain such secrecy.  As such, law enforcement personnel are not prevented from using other means to carry out investigations and reveal if a person who has made a disclosure under the Act is suspected of any committing offenses. In any event, the Finance Act does not preclude law enforcement personnel from obtaining court orders/warrants directing the Inland Revenue Department to disclose certain information in its possession. 

On a plain reading of these provisions the Finance Act does not invalidate or suspend the operation of money laundering laws and laws aimed at preventing financial crimes. The confidentiality of disclosures recognised under the Finance Act does not preclude law enforcement authorities from commencing investigations and the taking of appropriate steps to assert liability for money laundering and related offences uncovered thereby.

Therefore, we classify the MP’s statement as TRUE.

*FactCheck.lk’s verdict is based on the most recent information that is publicly accessible. As with every fact check, if new information becomes available, FactCheck.lk will revisit the assessment.

 

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