The National Board of Revenue is set to provide tax privilege at the rate of 15 per cent for five years to asset management companies in a move to boost their role in the capital market, officials said.
At its board meeting held in last week, the revenue board decided to provide the tax benefit to the AMCs listed at the capital market on their income from mutual fund management fees, they said.
Currently, there are 17 asset management companies that operate and manage mutual funds in the country’s stock markets and they have to pay income tax at the rate of 37.5 per cent.
Earlier, Association of Asset Management Companies, led by state-owned Investment Corporation of Bangladesh, demanded the NBR for fixing income tax at the rate of 10 per cent for the next 10 years.
In the application, the association argued that if they were provided the benefit, they would help the capital markets to be stabilized with increased inflow of capital and more new investors in the capital market.
‘Scrutinising the application and considering the role of AMCs in establishing the capital markets on a strong base in future, the revenue board decided to provide the benefit,’ a senior NBR official told New Age on Monday.
The revenue board hopes the benefit would play a positive role in developing the country’s capital markets, he said.
In the application, AAMC pointed out that they had created opportunities for the banks, non-banking financial institutions, insurance companies, small investors and non-resident Bangladeshis in investing Tk 3,000 crore in the country’s capital markets from 2010 to 2012 that contributed to liquidity supply during the recent crash in the markets.
They also claimed that they had arranged different trainings, seminars and other programmes
for creating awareness among the investors over the years.
According to the association, AMCs provide profit to the investors, particularly retail investors,
through operating mutual funds.
AMCs get 0.5 per cent to 1 per cent one-off fees for managing mutual funds and 0.9 per cent to 1.2 per cent fees for recurring management of mutual funds.
According to the association, the mutual fund industry in the country is still at its infant level and requires nurturing for growth.
In developed countries like USA and European Union, mutual funds provide 80 per cent of total capital of the markets, even in India and Pakistan
the rates are 25 per cent and 14 per cent respectively while the rate is
only 2 per cent in Bangladesh, according to data of AAMC.
In neighboring Pakistan, AMCs enjoy such tax benefits as they pay income tax at the rate of 25 instead of regular 35 per cent while in Sri Lanka AMCs pay tax at 10 per cent instead of 28 per cent.
According to AAMC, there are 17 asset management companies that operate 43 mutual funds
listed in the country’s stock markets. The
AMCs are registered with the Bangladesh Securities and Exchange Commission.
-With New Age input
