NBR devises ways for tax waiver on capital gains

Stock brokers of the Dhaka Stock Exchange will have to invest the money they will get from the share sell-off to the Chinese consortium through a separate beneficiary account (BO) to get discount on capital gains tax, said finance ministry officials.

The National Board of Revenue will issue a notification soon making it mandatory for the money to be invested in securities for three years.

“The money and profits from the securities cannot be withdrawn from the BO account during this period,” said a finance ministry official.

If they do so, they will enjoy the benefit of 5 percent capital gains tax instead of 15 percent.

The NBR has prepared the package following appeals from stock brokers for waiver on capital gains tax on the proceeds from sell-off of 25 percent stakes, or 45.09 crore shares, of the Dhaka bourse to the Chinese consortium of Shenzhen Stock Exchange and Shanghai Stock Exchange.

The DSE gets Tk 962 crore from the Chinese consortium. Of the amount, Tk 15 crore has been deducted as stamp duty, meaning that brokers will get Tk 947 crore.

Finance Minister AMA Muhith assured them of giving tax privilege to shore up the market that has been sluggish for the last few months.

The DSEX, benchmark index of the premier bourse, declined 936.76 points, or 14.83 percent, in the last 10 months.

During the period, the DSE shed Tk 40,412.93 crore in value.

Officials said the NBR has finalised the terms and conditions for the notification.

“We are analysing the legal issues now. It has been sent to the law ministry for vetting,” the official said.

If stock brokers want to get the tax waiver they have to invest the money throughout the next three years.

The realised gains of the account will have to be kept in the stock market, he added.

If anyone wants to liquidate his/her investment within three years, he will have to pay the remaining 10 percentage points tax.

Stock brokers will have to submit statements of their BO accounts within July 31 of each year to the field office of the NBR, he added. 

Officials of the Bangladesh Securities and Exchange Commission (BSEC) said the government is very keen to keep the market vibrant.

The government is trying to bring about optimism among investors ahead of the national election.

“As a result, this decision came,” said a commissioner of the BSEC, adding that they worked to give the tax waiver for the sake of capital market.

The investment of the sum will reduce the liquidity crunch and give confidence to investors, said Mostaque Ahmed Sadeque, president of the DSE Brokers' Association.

Investors should not be frightened about the national election, he said, adding that many stocks are becoming very lucrative now, so they could do well by getting in on the act now.