The Dhaka and Chittagong stock exchanges have urged the government to increase tax free dividend income to Tk1 lakh from the existing Tk25,000, in order to increase the participation of small investors in the capital market.
The Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) separately made the demands in their budget proposals for the fiscal year 2018-19, placed before the National Board of Revenue (NBR) on Tuesday. “Considering the present market scenario, small investors may be allowed tax exemptions up to Tk1 lakh on dividend income,” DSE Managing Director KAM Majedur Rahman said. “If offered, this will help attract the small investors to the capital market, and ultimately ensure sustainable development. At present, the capital market is facing a serious liquidity crisis,” he added. In its 11 point list of demands, the DSE also urged the government to reduce corporate tax for publicly listed companies to 15% from the current 25% for the fiscal year 2018-19.
At present, publicly listed companies have to pay a minimum of 25% and maximum of 40% tax, based on their business category. The DSE also proposed to reduce the tax at source on share transactions to 0.015% from the existing 0.05%, in consideration of the volatile state of the current market. Meanwhile, the Chittagong bourse has demanded 100% tax exemptions on the income of stock exchanges for the next two years, for sustainable growth and smooth operation of the exchanges which were presently operating at a loss. In addition to a three-year tax holiday on the sales proceeds of shares, the country’s two stock exchanges have sought exemption from the capital gain tax on block shares in the fiscal year 2018-19.
The DSE also wishes to purchase savings certificates, which stock markets are presently not allowed to buy. NBR Chairman Mosharraf Hossain Bhuiyan said: “The government has increased the size of the budget and expects tax revenues of Tk30/40 crore. Corporate tax will be considered, but the time is not fixed.” The DSE also proposed a 0% VAT on the rent for office spaces or buildings used for commercial purposes, as opposed to the current 15%.The Bangladesh Insurance Association (BIA) has proposed a 5% cut on the gain tax on the policy bonus of policyholders on life insurance. It also proposed a cut on the source tax at insurance agents.