Dhaka, Bangladesh (BBN)- Finance Minister A M A Muhith has proposed some new incentives for ensuring sustainable development of stock market.
The proposed budget include exemption of tax on individual investors' dividend income up to BDT 5,000, reduction of corporate tax rate for merchant banks, and provision of 10 percent tax rebate facility for the companies floating initial public offering (IPOs).
"We are firmly committed to strengthening the capital market along with maintaining its stability," the finance minister said on Thursday while unveiling the national budget for fiscal year (FY) 2012-13.
He proposed exemption of tax on individual investors' dividend income of up to BDT 5,000 in the next fiscal, a new incentive for share investors.
To encourage new listing on the stock market the minister offered 10 percent tax rebate facility for the companies floating shares amounting to 20 per cent of their respective paid-up capital through IPO.
Reduction of income tax rate for the merchant banks has been proposed at 37.5 percent, from the existing 42.5 percent.
"Undoubtedly, the role of stock market is important for capital formation, industrialization and employment generation. Despite worldwide economic slowdown, our capital market remained buoyant. But, later on, this buoyancy could not be sustained," the minister said.
The existing facility for investment of undisclosed income in stock market will remain unchanged.
"It is sad but true that during the last one year the market went through massive correction in terms of capitalization and indices. We took different initiatives to rectify the situation, which will restore stability in the stock market."
Mr Muhith said at the same time, they have taken initiatives to restore investors' confidence, and declared several incentive packages for the capital market.
Face value of each share of all listed companies and mutual funds of two stock exchanges has been reset at BDT 10.
Besides, a separate clearing and settlement company is going to be established to facilitate stock transactions within the shortest possible time, the minister added.
"In future, we will also take initiatives to establish a special court for disposal of the capital market related cases,” he noted.
About the importance of the proposed Financial Reporting Act for establishing stability in the capital market, Muhith said: "It is by no means possible to prevent over valuation or under valuation of stocks unless the accounts of the business entities are transparent and reliable.
A draft of the act has been prepared. After necessary scrutiny, it will be presented before the parliament for approval soon, he hoped.
BBN/SSR/AD-08June12-1:50 pm (BST)
