Stock investors are going to enjoy the existing tax benefits in the upcoming fiscal year 2019-20, said National Board of Revenue (NBR) Chairman Md Mosharraf Hossain Bhuiyan yesterday.
“We are also considering measures to provide support to the affected investors,” he said at a discussion on the possible fiscal measures for 2019-20 with the Economic Reporters’ Forum (ERF) at the NBR headquarters in Dhaka.
ERF President Saif Islam Dilal recommended that the tax administration take steps for the long-term development of the capital market. Bhuiyan said the prime minister was worried about the development of the stockmarket and his office has been given instruction to examine ways to provide support to the market.
The market has been on the downturn for the past three and a half months in the face of wobbling confidence of investors and a liquidity crunch.
On April 29, the Dhaka stocks sank to a 27-month low, compelling aggrieved investors to stage a hunger strike in front of the Dhaka Stock Exchange (DSE). The DSEX, the benchmark index of the DSE, dipped 62.73 points to close at 5,175.46 on the day.
However, stocks rebounded yesterday.
Bhuiyan said he talked to the heads of the Bangladesh Securities and Exchange Commission (BSEC) and the Bangladesh Bank on giving support to the stockmarket.
The finance minister has also given some directives about the market, he said, adding that affected investors had been given loan benefits in the past.
“We will consider similar measures this time,” said Bhuiyan, adding that the BSEC and the Investment Corporation of Bangladesh would determine who the affected investors were.
He suggested investors refrain from buying shares that have weak fundamentals.
Currently, stock investors do not have to pay tax on dividend income of up to Tk 25,000 from a company, according to the NBR. Besides, general investors do not have to count tax on capital gains from selling securities.
Companies and firms face 10 percent tax on the earnings from selling securities at the stock exchange. And 5 percent tax is imposed on sponsors and directors of bank, financial institutions, insurance and leasing companies, merchant banks, portfolio management companies and stock dealers and brokerage firms.
Besides investors, whose share holding exceeds 10 percent of the paid-up capital of a listed company at any time in a year, have to pay 5 percent tax on capital gains from the sales of securities, according to an NBR notification.
At the meeting, the ERF proposed taking measures to prevent tax evasion, building capacities of taxmen to curb tax evasion, ensuring transparency in tax benefits, and providing adequate focus on direct taxation.
Its members also suggested reforms and automation of the tax administration and impact assessment of tax incentives.
The NBR chairman said the extent of tax exemption should be reduced and he has already talked about the matter with the finance minister. “I will place the issue before the prime minister,” he added.
Responding to a query, Bhuiyan said information about taxpayers was provided to agencies, including the Anti-Corruption Commission to meet the need of inquiry into cases. Except for this, taxpayers’ information is not provided to any agency in general, he added.
Bhuiyan said his office would take initiatives to popularise online return submission and private sector firms would be allowed to assist taxpayers to file returns online on payment of a certain service charge.
He said he has directed field offices to ensure submission of tax returns of the registered taxpayer who have not filed tax returns.
On implementation of the VAT law, Bhuiyan said rebate benefit would not be applicable for goods and services where 15 percent VAT would be applied.
He also expressed reservations about a drastic change in corporate tax rate. Corporate tax accounts for 60-65 percent of the total direct tax and any drastic change will not bring about good result for the country, he added.
“If we are to go for drastic cuts, we have to find alternative sources of tax,” he said, adding that the corporate tax rate was 25 percent for companies.
Yet, the issue of 35 percent corporate tax comes to the fore as most of the companies do not want to be listed to avoid the obligation of maintaining proper accounts and ensure regular disclosure.
“Let the companies that face 35 percent tax get listed to the stockmarket,” he said.