The DSE Brokers Association of Bangladesh (DBA) has proposed a full tax exemption on capital gains earned by individual and foreign investors from listed securities until 2030 to restore investor confidence, increase market liquidity and encourage long-term investment in the country's capital market.
The association submitted the proposal to Finance Minister Amir Khasru Mahmud Chowdhury, Prime Minister's Special Assistant for Investment and Capital Market Tanvir Shahriar Gani, Bangladesh Securities and Exchange Commission (BSEC) Chairman Masud Khan and National Board of Revenue (NBR) Chairman Ahsan Habib on Wednesday.
According to the DBA, individual investors currently enjoy tax exemption on capital gains of up to Tk50 lakh from listed securities, while gains exceeding the threshold are generally subject to a 15% tax.
The association has proposed reinstating full tax exemption for individual investors and reconsidering the existing tax regime applicable to foreign individual and institutional investors.
The DBA believes that such incentives would help increase stock market transactions, encourage investors to reinvest their earnings and promote the productive use of domestic savings.
It would also expand equity financing opportunities for listed companies.
Under the proposal, the relevant provisions of the Income Tax Act, 2023, should be amended to exempt capital gains from eligible transactions executed through stock exchanges and settled through the designated central depository system.
However, the DBA has recommended retaining the existing tax regime applicable to sponsors, directors and institutional investors.
The association also pointed out that the introduction of a full-fledged Central Counterparty Bangladesh Limited (CCBL) would make capital gains calculation and tax assessment easier.
Considering this, the DBA has sought the tax exemption until CCBL becomes fully operational, saying the measure would provide investors with a more favourable tax environment during the transition period.
DBA President Saiful Islam said an investment-friendly tax regime for individual and foreign investors would help restore confidence in the capital market and encourage long-term investment.
It would also broaden financing opportunities for listed companies and facilitate the government's plans for developing the country's capital market, he added.