• Tuesday, Jan 19, 2021
  • Last Update : 01:01 am

DSE, CSE seeks full tax exemption for FY’16

  • Published at 06:11 pm February 24th, 2016

The stock exchanges have requested the National Board of Revenue to completely exempt them from income tax this fiscal year.

The authorities said the facility has been sought for the sake of smooth operation of the country’s bourses after demutualisation.

Dhaka Stock Exchange and Chittagong Stock Exchange sent separate letters to the NBR Chairman Nojibur Rahman recently making the request.

In its letter sent on February 14, the CSE argued that the bourse needed 100% tax-free benefit to enhance its financial and operational capacity for greater interest of the stock market.

The bourse fears that its net asset value will reduce and price of the shares may decline if the tax is not exempted, which could lead to creating difficulties for the exchanges to get fair prices from the strategic shareholders.

As per Demutualisation Act 2013, the bourse will have to sell 25% of its total issued shares to the strategic shareholders by 2016.

It will be very difficult for the bourse to sell its shares at expected high prices to the strategic investors if the NAV is dropped, the letter feared.

The DSE, in its letter on February 10, said it would need complete tax exemption for continuation of its ongoing reform measures under the demutualisation scheme.

Once provided, the exemption will help DSE attract strategic foreign investors for selling its shares in line with the conditions of demutualisation, said the DSE letter signed by its Managing Director Swapan Kumar Bala.

Both the DSE and CSE became demutualised stock exchanges in November 2013 following enactment of the Demutualisation Act. After the demutualisation, both the bourses turned into profit-oriented entities.

With the budget for the fiscal year 2014-15, the government offered tax exemption facility for 5 years in graduated reducing rate for demutualised stock exchanges to maintain stability in the country’s capital market.

As per the existing rules, DSE and CSE will enjoy relaxed income tax provision from their income until FY2018-19. This year, the exemption limit is 80% while it will reduce to 60% in the FY2016-17, 40% in FY2017-18, and 20% in FY2018-19. From 2019-20, the bourses will have to pay income tax at the rate of 35%. 

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