FE REPORT |
February 16, 2022 08:51:31
February 16, 2022 11:05:39
The country’s two stock exchanges have proposed a corporate tax cut for listed companies, to encourage multinationals and good local companies to go public.
The proposals were placed during a pre-budget meeting with the National Board of Revenue (NBR) in its conference room in the city’s Segunbagicha on Tuesday.
During the meeting, the Dhaka Stock Exchange (DSE) proposed a corporate tax reduction for listed companies from 22.50% to 17.5%.
In addition, the first exchange also proposed maintaining a special facility on investing undisclosed money in the stock market by lowering the tax rate to 5.0% from the current 10%.
Chaired by NBR member Md Masud Sadiq, the program was also addressed by NBR members Zakia Sultana and Md Shamsuddin Ahmed, while representatives from financial institutions, insurers and two stock exchanges – DSE and Chittagong Stock Exchange (CSE) – also spoke.
Referring to the system of “not asking about the source of income by investing in shares after paying a special tax” which was removed from the Income Tax Bill-2022, the CSE proposed to include the ability in the bill for people to invest their legally earned but undisclosed money in stocks.
The CSE also proposed that the tax administration lower the corporate tax rate for listed companies from 22.5% to 20%.
CSE chief executive Md Ghulam Faruque said the corporate tax gap between listed and unlisted companies should be widened so that companies with strong fundamentals are encouraged to go public.
Also, the focus should be on transparency in corporate reporting, he said.
The Port City Stock Exchange has also requested an increase in the dividend income tax exemption cap to Tk 100,000 from the existing Tk 50,000.
Speaking at the program, Mr. Shaifur Rahman Mazumdar, Chief Operating Officer (COO) of DSE, said that in terms of legalizing undisclosed money, reducing the tax rate will increase the flow of this money directly to the national economy.
Highlighting the expansion of the bond market for long-term financing, he proposed the removal of taxes on interest income on bonds similar to those on zero-coupon bonds.
However, in response to the DSE and CSE’s proposal to maintain the black money laundering scheme, NBR member Mr. Sadiq said that the beneficiaries of such a scheme hardly stand with the tax authority when it was criticized for giving the option.
He said: “Those who benefited from the investment of undisclosed money cannot be found when we (NBR) face criticism from different quarters of the country.”
In the meantime, proposing the complete abolition of the existing 5.0% policyholder profit tax, the Bangladesh Insurance Association (BIA) said that the number of policyholders had declined in the country due to the income tax.
At the meeting, the Bangladesh Merchant Bankers Association (BMBA) proposed lowering corporate tax for listed companies to 15% from the current 22.5%, as the current rate provides little incentive for companies to to apply for a scholarship.
Furthermore, BMBA Chairman Sayedur Rahman urged the NBR to lower the corporate tax rate for merchant banks to 25% from 37.5% as these institutions pay taxes under the Large Taxpayer Unit (LTU).
He also said it had been difficult for the country’s 66 merchant banks to manage even operating costs due to the sluggish stock market caused by the pandemic.