'Tax benefits will be given on the terms of investment in the capital market'
The government slashed the rate of capital gains tax for Dhaka Stock Exchange (DSE) shareholders on Wednesdayy on the condition the Tk947 crore they made through divesting a 25% stake to a Chinese consortium will be reinvested in the market for three years.
Finance minister AMA Muhith revealed the huge cut from 15% to 5% in a speech to mark the 25th anniversary of the Bangladesh Securities and Exchange Commission (BSEC) at the Bangabandhu International Conference Centre (BICC) in Dhaka.
“Tax benefits will be given on the terms of investment in the capital market,” he said.
“The amount has to be invested in the stock market for a minimum period of three years to become eligible for the tax break.
“The bourses’ members-shareholders who want the tax incentive must submit an investment proposal before getting the waiver from the government.”
Capital gains tax is levied on the profit realized on the sale of a non-inventory asset that was greater than the amount realized on the sale.
Leaders of the DSE Brokers Association (DBA) lobbied for the tax waiver in a recent meeting with the finance minister, arguing that it would increase the cash flow in the market which will ultimately help the government to earn from the trading tax.
They said the demutualised prime bourse of the country would be boosted with the injection of fresh funds if the 15% capital gain tax is waived under a policy support scheme of the government.
The investors claimed the lack of any such policy support would result in the loss of the potential investment.
Prime Minister Sheikh Hasina was the chief guest at Wednesday’s silver jubilee function for the BSEC.
In her speech, she outlined seven ways in which the stock market should develop, asking all concerned including the regulator to play key roles in protecting the interest of the investors.
The finance minister struck a celebratory tone in his speech.
“The government now can feel satisfied as the country’s capital market is truly well-established,” AMA Muhith said.
“Its advancement cannot be thwarted in any way. Its standing has been elevated in the world market.
“The existing commission will continue for the next two years and we hope when its tenure expires, a true security market will be established in the country.”
Muhith urged non-financial institutions to raise their funds from the capital market rather than bank and non-bank financial institutions, saying bank-reliant financing is not always good for lenders or borrowers.
Financial Institutions Division under the Ministry of Finance Secretary Md Asadul Islam and BSEC chairman M Khairul Hossain also spoke at the programme.