Stockbrokers call for slashing advance income tax

Stockbrokers have urged the government to reduce the advance income tax on the volume of trade as most of them are incurring losses amid the bearish trend in the market.

The stockbrokers now pay 0.05 per cent advance income tax, which means they have to pay Tk 50 for every Tk 1 lakh in their turnover. When the tax was imposed in 2010, turnover of the market was more than Tk 1,000 crore, said Sharif Anwar Hossain, president of the DSE Brokers' Association.

But it has been hovering around the Tk 500 crore-mark for the last couple of years.

"So the government should bring down the tax as soon as possible," he said.

Subsequently, in a letter to the finance minister on Wednesday, the platform of brokers called for bringing down the advance income tax to 0.015 per cent.

Many stockbrokers were compelled to shut their branch offices to reduce cost amid the steep fall in turnover in the stock market, Hossain said, adding that the situation has taken a turn for the worse due to the pandemic.

The turnover of the Dhaka Stock Exchange has been below Tk 100 crore since trading resumed on May 31 after more than two months of government-announced holidays to curb the spread of the novel coronavirus.

"Stockbrokers didn't earn a single penny during the time, but had to spend on employee salaries and count other charges," said Hossain, who is also the managing director of Shahidullah Securities.

He said they had appealed to the regulator, bourses and other stakeholders seeking a waiver of some charges at least for the current year, but to no avail.

"If we survive, so will investors. Otherwise, the government will lose huge revenue from stock trading," Hossain said.

He went on to call for a special fund for three years such that they can pay staff salaries.

"Every year we expect that the coming year would be better, but that year too ends in mounting losses," said another stockbroker asking not to be named.

Very few stockbrokers can book some profit at the end of the year.

"So the government should help us remain in business," he added.

The platform of brokers in its letter also urged the government to lower the corporate tax for listed companies to maintain the gap in corporate tax between listed and non-listed firms the same as before.

The provision in the proposed budget to allow investment of undisclosed money in the stock market is a positive gesture but the lock-in period of three years tagged with the proposal should be lifted, it said.

The tax rate for investing the undisclosed money in stocks should be 5 per cent and not 10 per cent as was proposed, the stockbrokers said.