Raise ceiling for tax-free dividend income: DSE

The Dhaka bourse yesterday urged the revenue authority to increase the ceiling for tax-free dividend income to Tk 100,000 in a bid to attract more investors to the market, which is going through a liquidity crisis.

At present, the ceiling for tax-free dividend income is Tk 25,000. If the proposal is taken into consideration, it will help ease the liquidity crisis in the capital market, the Dhaka Stock Exchange said in a set of recommendations to the National Board of Revenue for the upcoming fiscal year.

Small investors will also be benefitted as they have suffered a great deal due to the previous market turmoil. “It will ultimately enhance growth and development of the capital market,” the DSE said.

The premier bourse also requested the NBR to reduce tax at source on share transactions to 0.015 percent from existing 0.05 percent considering the market’s current volatile situation.

The reduction will bring down the cost of transaction, which will ultimately enhance trade volume and related taxes, the bourse said.

The DSE, on behalf of the government, collects the tax at a 0.05 percent rate on the value of shares, mutual fund units or other securities transacted at the stock exchanges, and deposits the revenue to the state coffer.

The prime bourse also demanded full tax exemption facility for another three years for sustainable growth and smooth operation of the exchange, which is now incurring operating losses.

“The government provided full tax exemption for the first two years of demutualisation of the exchange and we are supposed to pay taxes at graduated rates from the next fiscal year,” said Siddiqur Rahman Miah, chairman of the DSE, while addressing a press briefing.

Tax exemption for another three years will help the DSE strengthen its technology for providing better services to investors, he said. Before demutualisation, the stock exchanges were non-profit cooperatives owned by the exchange members and were not subject to corporate tax.

But with the demutualisation, which is a way of separating the management from ownership, the bourses were converted into profit-oriented companies owned by shareholders in 2013. As a result, they are subject to 35 percent corporate tax.