Dhaka Stock Exchange (DSE) Sunday demanded of the government to reconsider the proposal for raising the corporate income tax of publicly traded mobile phone companies in Bangladesh.
“This will definitely discourage non-listed telecom companies to be listed,” DSE President Rakibur Rahman told a post-budget press conference at the stock exchange.
“If good companies feel discouraged to go public, it will be a blow to the development of the stock market,” he said.
Finance Minister AMA Muhith in his budget speech proposed to increase the tax to 40% from existing 35% for the listed mobile phone companies.
Rakibur urged the government to utilise the stock market as a source of fund to finance the budget deficit.
“The government can think of stock market to finance big infrastructure projects like Padma Bridge and mitigate dependence on bank borrowing,” he said.
He also recommended offloading shares of state-owned enterprises and corporatise roads, bridges and water transports to offset budget deficit.
The DSE president, however, welcomed the finance minister for keeping a bunch of incentives for the capital market.
About investment of undisclosed money on stocks, he said it has had little impact on the market over the last three years.
“However, we welcome keeping such conditional provision for the stock market.”
The budget proposed to rescind the existing provision of charging 3% tax on the premium over the face value of shares of a company. “This will encourage new companies to enter in the stock market,” said Rakibur.
Increasing the threshold of tax-exempted dividend income from Tk5,000 to Tk10,000 was one of the proposals of the budget.
“This is not enough taking the present market condition into account. We request to reconsider our demand for raising it to Tk50,000,” he added.
On proposal of repealing the provision of charging 0.05% tax at source on the total income from bond sale and also allowing 15% tax rebate on investment in private mutual funds alongside public mutual funds, he said it will help revitalise the ailing bond market and make mutual funds popular.
The DSE also thanked finance minister for a set of budgetary measures, including continuation of the existing provision of exemption of tax on gains from transactions of shares by individual taxpayers, plan to consider tax exemption when the proposed demutualisation of stock exchanges will be effective, assurance of speedy finalisation of Financial Reporting Act and settlement of quick disposal of the stock-market related cases.
The DSE also demanded reconsidering their proposal to reduce the rate to 5% on shares held for 1 to 2 years, 2% for 2-3 years and 0% for upwards of 3 years, cutting tax at source for brokerage firms to 0.015% from 0.05%, allocation of Tk50bn for stabilising the market, reduction of corporate tax for the listed banks, insurances and financial institutions.
The prime bourse also requested the finance minister to reconsider a DSE’s new scheme which would allow a 50% rebate on income tax for investors with outlays of up to Tk10m in the market. The scheme would have to have a lock-in period for three years.
