Stock market stakeholders yesterday sought a 15 per cent gap in corporate tax between listed and non-listed companies in the upcoming national budget to attract healthier firms to the bourses.
At present, the gap is 7.5 per cent on average. The corporate tax rate for publicly listed companies is 25 per cent and for non-listed firms 32.5 per cent.
A reduced corporate tax rate will encourage multinational and good companies to get listed with the exchanges, said M Shaifur Rahman Mazumdar, chief operating officer of the Dhaka Stock Exchange.
Mazumdar’s comment came at a pre-budget meeting with the National Board of Revenue at its headquarters in Dhaka.
Listed companies are required to disclose their financial and corporate governance measures in details.
Subsequently, if the number of listed companies can be increased, the government total revenue collection will also go up, Mazumdar said.
The DSE also proposed a reduced tax rate for small and medium enterprises at 10 per cent for five years from the date of listing.
Mazumdar proposed allowing the status of listed companies for firms whose securities are listed on alternative trading boards.
The DSE also sought to reduce source tax at a maximum of 0.015 per cent on the value of the transaction.
The premier bourse also proposed to increase investors' tax-free dividend income limit to Tk 2 lakh from the existing Tk 50,000.
But the DSE also sought to deduct taxes for non-residents.
As per section 56(1) of the Income-tax Ordinance, a capital gains tax of 15 per cent is applicable for non-residents.
“We would like to propose not to apply section 56(1) in case of capital gains on share trading. This will encourage foreign non-residents to invest in the capital market,” Mazumdar added.
Md Sayadur Rahman, president of the Bangladesh Merchant Bankers' Association, sought corporate tax cuts for publicly listed companies to 20 per cent.
At present, the corporate tax is between 25 per cent and 40 per cent based on the type of business.
Rahman went on to seek a reduction of corporate tax rates for merchant banks by 12.5 percentage points to 25 per cent.
He also proposed reducing the value-added tax for listed companies by 10 per cent.
Tamal Parvez, chairman of NRBC Bank and representative of the Bangladesh Association of Banks, demanded a reduction of corporate tax for banks so that they can spend on social development and increase employment in the country.
The DSE and the BMBA also proposed allowing undisclosed money in the capital market until the next fiscal year, taxed at 5 per cent.
Md Abdul Khaleque Miah, chief executive officer of Sonar Bangla Insurance and representative of the Bangladesh Insurance Association, demanded the withdrawal of the 5 per cent tax provision on insurance policy benefits of policyholders and removal of 15 per cent VAT and 5 per cent source tax on agents’ commission.
The corporate tax for non-life insurance firms should be reduced to 35 per cent and 30 per cent for life insurers, he added.
“We may not be able to consider all the proposals because of the overall economic circumstances and because the government requires more revenue for development,” said Abu Hena Md RahmatulMuneem, chairman of the NBR.
The NBR chairman sought assistance from businesses for bringing transparency in revenue collection.
