DSE collects 0.05% tax on turnover and 5% tax on capital gains from share sales by sponsor-directors and placement holders
The tax Dhaka Stock Exchange (DSE) paid to the national exchequer increased by 7.52% to Tk250.68 crore in the just concluded fiscal year (FY) despite that average turnover fell by 5.01% in the year compared to 2017-18FY.
Analysts and market operators have attributed the rising government earnings from the premier bourse to rising turnover value of capital gains from share sales by sponsor-directors and placement holders.
As per the Income Tax Ordinance 1984, the DSE collects 0.05% tax on turnover and 5% tax on capital gains from share sales by sponsor-directors and placement holders.
According to the DSE data, in FY19 the revenue board received Tk250.68 crore against Tk233.14 crore in the previous fiscal year, up by 7.52% or Tk17.54 crore in FY19.
In FY19, the government received Tk145.95 crore in taxes on turnover against Tk159.02 in the FY 18.
The tax on sponsor-directors’ capital gains, however, hit a five-year high in FY19 to Tk104.73 crore from that of Tk74.12 crore in FY18.
Senior official of DSE told Dhaka Tribune: “The volume of the tax depends on turnover of the stock exchange. The tax collection witnessed slow growth in last several months as the turnover remained within a certain boundary, but sponsor-directors capital gains increased in FY19”.
In DSE, the daily average turnover declined by 5.01% to Tk614.25 crore in FY19 (238 trading days) compared to that of Tk 646.68 crore in FY18 (246 trading days).
DSE members submit the taxes after collecting from investors on their transactions.
The government’s tax collection from the DSE hit its all-time high in the fiscal year of 2010-11 to Tk447.28 crore. Tk174.89 crore in taxes was collected from the DSE in FY15, Tk157.78 crore in FY16 and Tk246.72 crore in FY17.
The DSEX gained just 16 points in FY19 to close at 5,421.6 points on June 30, the last trading day of the fiscal year. The index was at 5,405.46 points on June 28, 2018.
Meanwhile net foreign investment in DSE fell to negative Tk183.70 crore in FY19, lowest in eight years since 2011-12 FY. In 2017-18. The net foreign investment was Tk71.76 crore positive. The FY19 figure was the lowest since the market crash in FY 2010-11 when the net foreign investment was Tk 404.59 crore negative.