The proposed budget for the fiscal year 2018-19 has disheartened stock market stakeholders as it did not reflect even a single demand placed for consideration in the budget proposal.
Finance Minister AMA Muhith placed the budget proposal for FY19 in parliament on Thursday. The government has proposed to reduce corporate tax for publicly traded banks, insurance and non-bank financial institutions.
Stakeholders in the capital market said they are disappointed with the proposed budget, as there is no mention of the stock market in it.
The chiefs of the two bourses, Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) told the Dhaka Tribune on Thursday that their demands were not taken into account.
“In the proposed budget, the government did not consider the demands badly needed for the stock market to make it vibrant. But we are not losing hope and we will sit with the minister to place our demands for reconsideration,” DSE MD, KAM Majedur Rahman said.
“I hope that for the sake of small investors, the minister will pay heed to our demands,” he added.
Former DSE president Shakil Rizvi said: “I think the government should cut the corporate tax rate as well as the savings certificate rate,” he said.
Mostaque Ahmed Sadeque, president of DSE Brokers Association (DBA), said: “If the corporate tax on listed companies is reduced, the stock market will be stable for a long time.”
The DSE and CSE MDs urged the government to re-consider at least three of their demands to bring dynamism to the stock market.
The three demands include giving a five-year tax holiday for the post-demutualized stock exchanges and cutting tax-at-source on TREC holders’ share transaction to 0.015% from the existing 0.05%, the tax-free dividend income to Tk1 lakh from the existing Tk25,000.
Finance Minister Muhith said during his budget speech: “It is possible to develop the bond market through the transactions of various types of securities. Keeping this in view, we are going to launch Floating Rate Treasury Bond (BFIU). Already the guidelines and directives have been issued in this regard.”
He also said the government was contemplating the introduction of shariah-based securities.
DSE and CSE separately made the demands in their budget proposals for the fiscal year 2018-19 and placed them before the National Board of Revenue (NBR).
The DSE also urged the government to reduce corporate tax for publicly listed companies to 15% from the current 25% for the fiscal year 2018-19.
At present, publicly listed companies have to pay a minimum of 25% and maximum of 40% tax, based on their business category.
Meanwhile, the Chittagong bourse has demanded 100% tax exemption on the income of stock exchanges for the next two years, for sustainable growth and smooth operation of the exchanges which were presently operating at a loss.