Dhaka, Bangladesh (BBN)-Bangladesh’s prime bourse has placed a set of budget proposals to the National Board of Revenue (NBR) recently, including increase the ceiling of tax-free dividend income to BDT 50,000 from the existing BDT 20,000.
“Considering the present market scenario, small investors should be allowed for tax exemption up to BDT 50,000 on dividend income, as they have suffered a lot due to the market turmoil previously,” said Dhaka Stock Exchange (DSE), in its budget proposals for the fiscal year 2015-16.
The DSE demanded a reduction in the corporate tax rate for listed companies to 25 percent from existing 27.5 percent.
The corporate tax rate for non-listed companies is 35 percent now.
“The minimum corporate tax gap between listed and non-listed companies should be 10 per cent, that will encourage the good and healthy non-listed company to listed one,” said the DSE.
DSE also proposed to reduce tax at source on share transactions to 0.015 percent from the existing 0.05 percent considering the current volatile situation in the market.
“The reduction will ultimately enhance trade volume,” the premier bourse said.
The DSE, on behalf of the government, collects the tax at 0.05 percent rate on the value of shares, mutual fund units or other securities transacted at a stock exchange, and deposit the revenue to the state coffer.
The prime bourse also proposed providing full tax exemption facility for five years, instead of existing partial exemption at graduated rates, for sustainable growth and smooth operation of the exchange, which is now incurring operating losses.
“Currently, the government is not getting any tax on the exchange’s income due to the exemption and hence, the 100 percent tax holiday will not affect the government’s revenue,” the bourse said.
The bourse also called upon the finance ministry to withdraw the provision of deduction of tax from gains on securities traded in the exchanges, as it is not possible by TREC (trading right entitlement certificate) holders to calculate the gain after adjusting previous five years’ capital loss.
“Most TREC holders’ companies don’t have the capacity to do this task,” the DSE said.
As per the law, TREC holders will deduct 10 percent tax on realised gains from share trading by an institution.