Reduction in corporate taxes only for non-listed cos unfair: DSE
Dhaka stocks may witness a bumpy ride on Sunday (today) as the proposed budget slapped capital gain tax on investors and did not contain any stimulus for the ailing capital market, officials of the Dhaka and Chittagong stock exchanges predicted.
‘The capital gain tax is a sensitive issue for the investors. The market will surely witness bumpy ride on Sunday when the trading on the stock market resumes after the announcement of budget on Thursday,’ a DSE official told New Age on Saturday.
A Chittagong Stock Exchange official said that the volatility in the stock market, which began few days before the budget announcement, might continue when the trading resumes in the market on Sunday.
When asked how the market would behave after the budget, Dhaka Stock Exchange managing director Swapan Kumar Bala said the capital market would react to the budgetary measures in the next trading session on Sunday.
He, however, would not specify what kind of reaction the market would show.
Although the finance minister, AMA Muhith, did not mention the gain tax issue in his budget speech and only mentioned two benefits that the market would get, the government in the finance bill imposed gain tax on investors.
As per the bill, 3 per cent tax will be slapped on the individuals with more than Tk 10 lakh capital gain in a year, while the gain tax will be 5 per cent if an individual earns more than Tk 20 lakh a year.
Swapan at a post-budget press conference said that collecting source tax on investors’ gain on share transfer at 3 per cent through brokerage houses would not be viable as investor might have another link account with another brokerage house that would make the calculation difficult.
‘That’s why we would request the government to continue the existing taxation system,’ he said.
DSE chairman Siddiqur Rahman Miah, DSE director Ruhul Amin and chief regulatory officer AKM Ziaul Hasan Khan were also present, among others.
Both the bourses, DSE and CSE, said that the proposal to reduce 2.50 per cent corporate taxes for the non-listed companies was unfair.
The government in the proposed budget reduced corporate taxes to 35 per cent from the existing 37.50 per cent for non-listed companies, while corporate taxes for the listed companies remained unchanged at 27.50 per cent.
The government decision will also reduce the tax gap between the listed and the non-listed companies to 7.50 per cent from the existing 10 per cent.
CSE chairman Muhammad Abdul Mazid said it would be discouraging for the listed companies as the corporate taxes rate for them remained unchanged.
‘The government should have reduced the corporate tax rate for the listed companies accordingly,’ Abdul Mazid, also a former National Board of Revenue chairman, said. ‘It would have been “justice” if the government reduced corporate tax for the listed companies accordantly by 2.50 per cent,’ Swapan said.
‘Though the reduction in corporate tax for the non-listed companies is a start of a good culture, we appreciate it,’ DSE MD said.
Any of the bourses, however, denied terming the budget neither friendly for the capital market nor unfriendly for it.
Abdul Mazid also said that the government should make it clear that how the five-year tax exemption for the bourses would be effective.
The finance bill also imposed 15 per cent gain tax on DSE and CSE’s shareholders’ capital gain through selling shares of the exchanges.
-With New Age input
