DSE, CSE seek tax waiver on share transaction of SMEs

Dhaka and Chittagong stock exchanges on Tuesday urged for tax waivers on share transaction of small and medium enterprises (SMEs) that would be listed with the Small Capital Board.

Companies with a minimum paid-up capital of Tk5 crore are eligible to raise funds from the platform.

The bourses also 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 upcoming fiscal year (FY2019-20), during a meeting with the National Board of Revenue (NBR), presided by NBR Chairman Md Mosharraf Hossain Bhuiyan.

The stock exchanges also urged the government to reduce corporate tax for publicly listed companies to 15%, from the current 25%, in FY2019-20. At present, publicly listed companies have to pay a minimum of 25% and maximum of 40% tax, based on their business category.

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

Additionally, they urged tax emption on transaction of securities listed with SME platforms—currently 0.05%, in line with the existing law for the capital market.

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

DSE Managing Director KAM Majedur Rahman said considering the present market scenario, "small investors may be allowed tax exemptions up to Tk1 lakh on dividend income”.

“If offered, this will help attract small investors to the capital market, and ultimately ensure sustainable development. At present, the capital market is facing a serious liquidity crisis,” he added.

DSE and CSE also sought 100% tax exemptions on bond transactions and the income of stock exchanges.

Chittagong Stock Exchange (CSE) M Shaifur Rahman Mazumdar said that out of millions of companies currently registered in the country, most are yet to be listed in the stock market. 

"Only a few hundred companies are listed, which is a very small number. In order to transform Bangladesh into a middle-income country, listing can play an important role developing the private sector," he added.

He also said in order to increase market capitalization to GDP ratio, some urgent policy issues need to be addressed, which are: formulating policies to ensure listing of high-quality companies that are, at present, beyond the purview of the capital market or just unwilling to be listed; formulating policies for listing of state-owned and foreign companies; and establishing a corporate bond market through regulatory co-ordination and reformation. 

NBR Chairman Md Mosharraf Hossain Bhuiyan said the board is working hard to frame out a business and investment-friendly budget to mobilize industrialization and economic development in the country.

At the same meeting, Bangladesh Merchant Bankers Association (BMBA) sought corporate tax rates for merchant banks to be reduced by 2.5 percentage points to 35%. 

Furthermore, the Bangladesh Insurance Association (BIA) proposed a 5% cut on the gains tax on the policy bonus of policyholders on life insurance.
Source: https://www.dhakatribune.com

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