Bourses want black money investment in stocks, bonds

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The board of directors of Dhaka Stock Exchange (DSE) is divided over the 15% tax, imposed in the proposed national budget for fiscal year 2019-20, on the reserve and stock dividend of a listed company.

The rift surfaced at a post-budget press conference organized by the DSE at Motijheel in capital on Sunday, where its Chairman Abul Hashem and Director Rakibur Rahman said the decision of the government was appropriate considering the current situation of the market. 

Another Director Minhaz Mannan Emon, however, demanded a review of the government decision of imposing the tax.

Finance Minister AHM Mustafa Kamal placed the national budget in parliament on Thursday.

To encourage distribution of cash dividends, the finance minister proposed imposing 15% tax on stock dividend distributed to shareholders by any listed company.

He also proposed imposition of 15% additional tax on retained earnings and reserves, when it would exceed 50% of the paid-up capital of the company.

Meanwhile, DSE and Chittagong Stock Exchange (CSE) have requested the government to allow whitening black money in stock and bond market for the next financial year (FY2019-20) without any question about source of the money.

The prime bourse DSE seeks black money investment in bond market like in economic zones (EZs) and high-tech parks, with no question about source of the money if the investors pay a 10% tax on the amount to be invested.

Meanwhile, the port city bourse CSE seeks black money investment in capital market for stopping siphoning of money.

CSE Acting Managing Director Md Ghulam Faruque at a press conference in Dhaka said that if whitening black money was allowed in stock market, it would stop siphoning of money.

Both the bourses, however, welcomed incentives for the capital market. 

According to the proposed budget documents, the tax-free dividend income for investors in the capital market has been raised to Tk50,000 from existing Tk25,000.

CSE has again propose an exemption of tax on the dividends up to Tk1,00,000 from existing Tk25,000.

DSE Managing Director KAM Majedur Rahman said: “The proposed budget will fulfill the expectations of general investors.”

“Through these proposals, the private sector will become more powerful and an investment-friendly environment will develop in the country,” he said.

The DSE also urged the government to reduce corporate tax for listed companies to 15% from the current 25% in FY2019-20. 

At present, the listed companies have to pay a minimum of 25% and maximum of 40% tax based on their business category.

DSE and CSE have also proposed reducing the tax at source on share transactions to 0.015% from the existing 0.05%, considering the current volatile state of the market.

Additionally, they urged tax exemption on transaction of securities listed with SME platforms.

DSE said that stock market was offering a new avenue for SMEs in Bangladesh to access a huge pool of local capital — a fund raising initiative to reduce debt burden, enhance corporate profile, and create an optimal value for innovative SME entrepreneurs.

The prime bourse also demands withdrawal of stamp duty while issuing bond.
Source: https://www.dhakatribune.com

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