Dhaka, Bangladesh (BBN)-The DSE and CSE have urged the government to reconsider the tax measures proposed for the capital market in the budget for 2014-15 FY.

At post-budget press briefings held separately by the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE), they made the plea for reconsideration of the tax measures.

The budget Finance Bill 2014 imposed the tax measures saying – ‘any person, not being a company or firm or a sponsor shareholder or director of a company or a placement holder of a company or a mutual fund, will have to pay tax at the rate of 3.0 percent of the realised gains if his/her gains exceed BDT 1.0 million but do not exceed BDT 2.0 million’.

“The budget proposals will be reflected in Sunday’s share trading,” Dr Swapan Kumar Bala, managing director of DSE, said on Saturday in reply to a query whether the proposed budget is capital market-friendly.

Both the stock exchanges, however, expressed their optimism that changes might be brought in the proposals before parliament endorses the budget for the sake of the ongoing growth of the capital market.

“We welcome the budget as the proposed one is not the last thing. We will continue discussions with the government for reconsidering the proposals,” said DSE Chairman Justice Siddiqur Rahman Miah.

The exchanges said among the proposals, imposition of 3.0 to 5.0 percent tax on the gains incurred by individual investors, 15 percent tax on transfer of shares by the shareholders of exchanges might evoke 'reactions' in the capital market.

They also expressed dissatisfaction over ambiguity over tax exemption facilities for five years at a graduated rate for demutualised stock exchanges.

It was not clear whether the exchanges will enjoy tax exemption or come under the tax net within five years, they said.

Bala said the tax proposed on the capital gains of individual investors was not technically feasible and it would hinder the market's growth.

CSE Chairman Dr Muhammad Abdul Mazid said it might not be possible to deduct the capital gains tax if the investors quit the market before the year ends.

“Many TREC (trading right entitlement certificate) holders — the exchange members — have told us that it's not possible for them to deduct the capital gains tax due to technical barriers.

At the same time, the investors will not welcome the tax on their gains,” said Mazid at the press briefing held at the CSE’s Dhaka office.

BBN/BB/AD-08June14-11:00am (BST)