Retain undisclosed money investment scope in stock markets

Three associations operating in the financial industry urged the revenue authority to provide tax benefit and policy support in the next fiscal year.

The Bangladesh Association of Banks (BAB), the Bangladesh Insurance Association (BIA), and the Bangladesh Merchant Bankers Association (BMBA) placed the demands at a pre-budget discussion organised by the National Board of Revenue (NBR) at its office.

The BMBA urged the NBR to extend the provision of investing undisclosed income in the stock market for another year.

The Dhaka Stock Exchange (DSE) also placed its recommendations.  

The DSE said the deadline for the investment of undisclosed money in the capital market on payment of 10 per cent tax would expire on June 30.

"This special tax treatment facility may be extended up to June 30, 2022," it said, urging the NBR to cut the rate to 5 per cent.

On behalf of the BAB, Parvez Tamal, chairman of NRBC Bank, said the rate of corporate tax for banks was very high, although the banking industry played a key role in the economic development of the country.

The BMBA demanded a cut in corporate tax for listed companies to 20 per cent from 25 per cent to encourage more firms to go public.

The association said the existing gap of 7.5 percentage points in the tax rate between listed and non-listed companies does not provide enough incentive to firms listed with the stock exchanges.

Only 325 companies are listed at the stock exchange, although the number of registered companies is more than 150,000 in Bangladesh, according to the BMBA proposal presented by BMBA President Md Sayadur Rahman.

The BMBA also wanted a reduction in the tax rate for merchant banks to 25 per cent from 37.5 per cent.   

The DSE said companies to be listed on the SME board of exchanges may be offered concessional tax rate for a period of five years from the date of listing.

"This type of companies may not be encouraged to be listed due to huge disclosure requirements. Moreover, tax collection from these companies is not significant."

"If such companies are given concessional tax rate, they will be encouraged to go public, and in the long run, the tax collection of government will increase."