Stakeholders also expect allowing undisclosed money in the capital market until the next fiscal year, taxed at 5%
Stock market stakeholders expect a 15% gap in corporate tax between listed and non-listed companies in the upcoming national budget for the 2021-22 fiscal year to attract healthier firms to the bourses.
At present, the gap is 7.5% on average.
The corporate tax rate for publicly listed companies is 25% and for non-listed firms it is 32.5%.
They also expect to allow undisclosed money in the capital market until the next fiscal year, taxed at 5%.
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 (DSE).
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 detail.
Subsequently, if the number of listed companies can be increased, the government's total revenue collection will also go up, Mazumdar said.
The DSE also proposed a reduced tax rate for small and medium enterprises (SMEs) at 10% for five years from the date of listing.
Mazumdar also 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% on the value of the transaction.
The premier bourse also proposed to increase investors' tax-free dividend income limit to Tk2 lakh from the existing Tk50,000.
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% 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 (BMBA), sought corporate tax cuts for publicly listed companies to 20%.
At present, the corporate tax is between 25% and 40% 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%.
He also proposed reducing the value-added tax for listed companies by 10%.
The DSE and the BMBA also proposed allowing undisclosed money in the capital market until the next fiscal year, taxed at 5%.
They said the deadline for the investment of undisclosed money in the capital market on payment of 10 per cent tax would expire on June 30.
This special tax treatment facility may be extended up to June 30, 2022, it said, urging the government to cut the rate to 5%.
Sharif Anwar Hossain, president of DSE Brokers Association (DBA) said that if the black money whitening scheme is available in FY2021-22, the capital market will be strengthened next year.