DSE wants tax exemption for capital gains

The Dhaka Stock Exchange (DSE) yesterday demanded that the capital gains of individual investors be kept free of taxation in the upcoming national budget for fiscal year 2024-25.

The demand comes at a time when the National Board of Revenue (NBR) is planning to impose 15 percent tax on capital gains of more than Tk 50 lakh.

DSE Chairman Hafiz Muhammad Hasan Babu made the demand at a pre-budget press briefing at Dhaka Club Ltd in the capital's Shahbagh.

"Any new tax will further burden investors in this crucial time as the market is still under pressure due to the fallouts of Covid-19 and the Russia-Ukraine war," he said.

Around 90 percent of investors in the stock market are institutional investors, who currently face a 5 to 10 percent tax on capital gains. The remaining 10 percent are individual investors.

"If the NBR imposes tax on individual investors' capital gains, it will negatively impact the market by damaging their confidence," he added.

However, NBR officials said the move would not affect any small investors as they only want to catch some of the stock market's "big fish".

"The NBR doesn't have any intention to affect small investors who earn less than Tk 50 lakh from capital gains," an official of the NBR said, seeking anonymity.

Individual investors have benefited from tax breaks since 2015 as part of fiscal measures aimed at boosting Bangladesh's fledgling securities market.

However, the NBR's move comes in line with the International Monetary Fund's (IMF) recommendations to reduce tax expenditure and increase revenue to meet its aim of increasing the country's tax-GDP ratio by 0.5 percent next fiscal year.

The DSE chairman also mentioned that existing source taxes should be reduced from 0.05 percent to 0.02 percent.

It was also proposed that corporate tax for listed companies be reduced by 2.5 percentage points from the existing 20 percent.

"The corporate tax gap between listed and non-listed companies should be 10 to 12 percent to encourage good companies in the stock market," he added. The current gap is 7.5 percent.

Besides, the DSE demanded a tax exemption on bond income and keeping dividend income of up to Tk 50,000 tax-free. AGM Sattique Ahmed Shah, chief financial officer and acting managing director of the DSE, Khairul Bashar Abu Taher Mohammed, chief regulatory officer, and Mohammad Asadur Rahman, general manager and company secretary, were also present.