The Dhaka Stock Exchange on Saturday demanded introduction of a new scheme allowing 50 per cent rebate on income tax for new small-scale investors with investment up to Tk 1 lakh in initial public offerings or securities at the secondary market.
The scheme will have to a lock-in period for three years and the facility will be available for those investors whose annual income is below Tk 15 lakh, DSE proposals stated.
‘We demanded introduction of the scheme to improve the depth of the capital market and to improve flow of savings to the market,’ DSE chief executive officer Swapan Kumar Bala said at a pre-budget discussion with the National Board of Revenue at the NBR headquarters in the city.
New and small-scale investors will be benefited if the NBR introduces the scheme, he said adding that neighbouring India introduced such scheme in the last fiscal year.
The Bangladesh Securities and Exchange Commission and the Chittagong Stock Exchange also supported the DSE proposals.
At the meeting, the DSE and the CSE also demanded reduction in taxes on capital gains for companies and firms step by step based on the years of holding shares in the market and giving full waiver for those who hold shares for more than three years.
The two stock exchanges in the country also sought tax exemption for small-scale investors on income from dividend up to Tk 50,000 from the existing Tk 5,000.
‘We have placed the demands to inspire long-term investment by institutional investors and attract small investors to invest in the capital market to make the market stable,’ said Swapan.
He said that the situation of the capital market would improve if the NBR accept the proposals.
Currently, companies have to pay 10 per cent capital gains tax on their income derived from share transactions in the capital market.
The DSE proposed reducing the rate to 5 per cent for holding shares for 1 to 2 years, 2 per cent for holding shares for 2-3 years and zero per cent for holding shares for more than 3 years.
The CSE, however, proposed reducing the rate to 7.5 per cent for holding shares for 1-2 years, 5 per cent for holding shares for 2-3 years and zero per cent for holding shares for more than three years.
Swapan said that such tax rate based on period of holding shares would encourage the institutional investors to invest for long period of time.
The DSE also demanded a special allocation amounting to Tk 5,000 crore in the next budget for the capital market stabilisation.
The fund will be utilised in extending loan on refinancing basis to the investors at concessional interest rate, it said.
It also demanded enactment of the proposed financial reporting act and establishment of financial reporting council to facilitate the transparency and accountability of the auditors of listed companies.
The DSE, country’s leading bourse, also demanded reduction in corporate income tax rate to 32.5 per cent for publicly listed banks, insurances and financial institutions and 37.5 per cent for non-listed ones from the existing 42.5 per cent.
‘There is no possibility of revenue fall because of reduction in corporate tax rate for banks, insurances and non-banking financial institutions as such companies are showing higher profit every year,’ it said.
On the other hand, companies will be able to declare more dividends for shareholders and eventually the general investors will be benefitted, it said.
The DSE also suggested that the NBR should reduce the rate of advance income tax of individual taxpayers (resident and non-resident Bangladeshi) on income from dividends from the existing 10 per cent and treat it as final discharge of tax liability.
The DSE and the CSE also demanded continuation of tax exemption for stock exchanges for at least five years after demutualisation.
BSEC executive director Farhad Ahmed requested the NBR to consider the proposals placed by the DSE and the CSE to stabilise the market.
NBR chairman Ghulam Hussain said that revenue board would consider the proposals.
NBR members Syed Aminul Karim and Jahangir Hossain, and CSE president Al Maruf Khan spoke, among others, at the meeting.
-With New Age input
