The Dhaka and Chattogram stock exchanges yesterday demanded a cut in the corporate tax rate for the listed companies to attract non-listed firms to the market.
They also demanded doubling of the gap in the corporate tax rate between listed and non-listed companies.
Currently, the corporate tax rate for the listed companies is 25 percent and for the non-listed companies it is 35 percent, meaning firms that went public enjoy a 10-percentage point advantage.
Now, the Dhaka Stock Exchange (DSE) says the gap should be widened to 20 percentage points.
“If the National Board of Revenue (NBR) gives the incentive, some companies will be attracted to be listed. And if they get listed, it will generate revenue for the government through share transaction and many other ways,” said KAM Majedur Rahman, managing director of the DSE.
M Shaifur Rahman Mazumdar, managing director of the Chittagong Stock Exchange (CSE), said if the NBR cuts the tax rate, companies would feel inspired to go public. “This will leave a heavy impact on the market,” he said.
The two spoke at a pre-budget meeting at the NBR in Dhaka yesterday. Representatives of the DSE, the CSE, the Bangladesh Merchant Bankers' Association and many senior officials of financial institutions were present at the meeting.
There are more than 1 lakh registered companies in Bangladesh. Of them, 312 have been listed on the DSE as of January this year. The two bourses also sought tax exemption on dividend incomes up to Tk 1 lakh in a bid to encourage small investors to invest in the capital market.
At present, tax is exempted on dividend incomes up to Tk 25,000.
The DSE and the CSE also proposed to the NBR extend tax waiver to share transaction of companies that will be listed with the planned small capitalised board.
Securities listed with the SME platform must pay a transaction tax of 0.05 percent as per the existing laws.
The bourses called for tax waiver for the listed SME firms for three years as these companies are small in terms of market capitalisation.
To develop the SME platform, the stockmarket regulator has already reduced the issue management fees, application fees, underwriting fees, initial listing fees and annual listing fees. If the new board doesn't get incentive, it will be difficult to stabilise the market, according to the DSE proposal.
Md Mosharraf Hossain Bhuiyan, chairman of the NBR, said the government was always in favour of the stockmarket.
“We will not take any decision in the budget that harms investors,” he added.