Brokers decry 15pc capital gains tax

Stock brokers of the Dhaka bourse are disappointed as they will have to pay 15 percent capital gains tax on the sale of their shares in the bourse to a Chinese consortium.

Stock brokers have to part with 25 percent of their shares to a strategic partner as per the Demutualisation Act, 2013.

Accordingly, the Dhaka Stock Exchange signed a share purchase agreement with the Chinese consortium, comprising Shenzhen Stock Exchange and Shanghai Stock Exchange, on May 14 to sell the shares worth about Tk 947 crore.

As the bourse is not listed, the stock brokers will have to pay 15 percent capital gains tax, whereas the rate is 5 percent for the sponsors of the listed companies.

“Why will the stock brokers pay such a high capital gains tax?” asked the managing director of a leading stock broker, requesting anonymity.

“We [the DSE] are a non-listed company and we had no option to be listed first.”

The Demutualisation Act stipulates that the DSE would have to pick the strategic partner first before being listed in the market.

The official said this is totally discriminatory as they will have to pay more taxes.

On several occasions, the stock brokers urged the finance minister to rationalise the tax and also met with him recently.

“We approached the finance minister in written and verbally. He had also promised to consider our demand,” said Mostaque Ahmed Sadeque, president of the DSE Brokers' Association.

“But we are now hearing that he is not in a position to entertain our request.”

Sadeque said, if they are offered the tax waiver, they are ready to invest the sales proceeds in the capital market and pay 5 percent capital gains tax.

The Chinese consortium's money will arrive within next two to three weeks and the DSE is going to open an account to receive the money.

The exchange is waiting for the central bank's approval to open the account.

“We expect to get the money very soon,” said KAM Majedur Rahman, managing director of the bourse.

The Chinese consortium has bought 45 crore shares at Tk 21 each.

It sought a seat on the DSE board. The consortium, however, said it would not ask for any return on its investment for 10 years.