Venture capital firms demand tax exemption | The Daily Star
12:00 AM, June 21, 2019 / LAST MODIFIED: 12:52 AM, June 21, 2019

Venture capital firms demand tax exemption

The Venture Capital and Private Equity Association of Bangladesh yesterday sought tax exemptions for alternative investment fund managers, individual investors and mutual fund and tax rebates on provident fund investments for the next 10 years.

If the government does not provide such incentives, which aid robust growth in the digital space, potential investors will not gain interest in such new kinds of funding, the association added.

The platform had been seeking the exemptions for the last couple of years but found no response.

Voicing the demand at a press meet in the capital’s Karwan Bazar, Shameem Ahsan, the association chairman, said venture capital bore noteworthy relevance for economic development, particularly in countries like the US, Singapore and Indonesia.

Venture capital got adequate policy support from governments in those countries, which directly aided the emergence of the biggest multi-billion dollar companies, he said.

“Venture capital directly triggers employment generation, creates self-employment opportunities and is often the only available source of financing for small and young companies,” said Ahsan, also a partner at Pegasus Tech Ventures.

Venture capital is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.

Shawkat Hossain, the secretary general, said the nascent venture capital and private equity sector needed a decade-long exemption.

“A period of 10 years is standard and before that, the earnings are small and required to keep the company afloat,” he said, adding that tax on this small income would be “very much ruinous” for the industry.

The body appreciated the government allocation of Tk 100 crore in startup capital for promoting all types of youth enterprises.

“With adequate policy support, venture capital companies in Bangladesh can collectively raise and invest thousands of crores in startups. All we need is policy support from the government,” said Hossain, also the managing director of BD Venture.

Zia Uddin Ahmed, the association’s vice chairman and chairman of VIPB Asset Management, said the government should put special emphasis on information technology and supporting dynamic growth of young entrepreneurs.

Wali-Ul Maroof Matin, a director of the platform, and the founder and managing director of Maslin Capital, said alternative investment fund mobilisation was the most critical financial inclusion process being practised in the world economy.

The Bangladesh Securities and Exchange Commission passed the alternative investment rules in 2015, under which various venture capital and private equity companies have been established.

In addition, many such foreign entities are active in Bangladesh, investing $300 million in total in about 60 startups, according to the association. With some tax benefits, this investment could get much bigger, it said.

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