Stock market stakeholders called for amending income tax law to remove complexities over deduction of tax at source on capital gains of companies and partnership firms.
Currently, custodian banks, merchant banks and financial institutions or trading Right Entitlement Certificate (TREC)-holder companies have to collect information by their own on deduction of tax at source on capital gains from companies and partnership firms through ascertaining profit of the companies.
However, TREC holding companies found it difficult to implement the provisions due to procedural complexities in existing trading practices of the companies and firms.
Representatives from Bangladesh Securities and Exchange Commission (BSEC), Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE), Association of Trading Right Entitlement Certificate (TREC) Holders and Central Depository Bangladesh Limited (CDBL) made the call at a meeting with the income tax wing of the National Board of Revenue in the city yesterday.
The income tax wing of the NBR organised the meeting to discuss its legal provisions on the deduction after it found lack of clarity over implementation of the tax on capital gains.
The NBR in FY2014-15 slapped 10% tax at source on capital gains that custodian banks, merchant banks, financial institutions or TREC-holder companies, but the tax collection remain unimplemented due to unavailability of actual information on net profit of the companies.
The DSE through a recent proposal filed before finance ministry said it is almost impossible to collect necessary information including realised gain and acquisition costs if linked accounts are maintained in different places.
Currently, about 9,791 companies have Beneficiary Owner’s (BO) account out of 3.2m total BO account holders. Of the number, many companies have more than one BO account with different houses.
“In most of the cases, the companies and the firms maintain either more than one BO account or linked accounts of the original one with different trading houses, which creates difficulties in information collection on realised gain and acquisition cost from different houses,” an official attending the meeting told the Dhaka Tribune.
As of FY2013-14, the companies have to pay capital gain tax at the time of submission of tax return at the year-end on the basis of their declared net profit and gain.