Corporate Tax

Demand for a 15% corporate tax hole between listed, unlisted corporations

Stakeholders also expect undisclosed funds to be admitted to the capital market by the next fiscal year, which will be taxed at 5%.

Stock market players expect a 15% corporate income tax gap between listed and unlisted companies in the upcoming state budget for fiscal year 2021-22 to attract healthier companies to the stock market.

The gap is currently 7.5% on average.

The corporate income tax rate for listed companies is 25% and for unlisted companies 32.5%.

They also expect to allow hidden funds on the capital market, which will be taxed at 5%, by the next financial year.

A reduced corporate tax rate will encourage multinational and good companies to be listed on the stock exchanges, said M. Shaifur Rahman Mazumdar, chief operating officer of the Dhaka Stock Exchange (DSE).

Mazumdar’s comment came at a pre-budget meeting with the National Board of Revenue at its Dhaka headquarters.

Listed companies are required to disclose their financial and corporate governance measures in detail.

Also Read – DCCI Aims to Gradually Reduce Corporate Income Taxes for 3 Consecutive Fiscal Years

If the number of public companies can be increased, the total government revenue will increase, too, Mazumdar said.

The DSE also proposed a reduced tax rate for small and medium-sized enterprises (SMEs) of 10% for five years from the date of listing.

Mazumdar also proposed allowing public company status for companies whose securities are listed on alternative trading bodies.

The DSE also tried to lower the withholding tax to a maximum of 0.015% of the transaction value.

The Premier Exchange also proposed increasing the limit on tax-free dividend income for investors from the existing Tk 50,000 to 2 lakh.

But the DSE also tried to deduct taxes for non-residents.

For non-residents, a capital gains tax of 15% applies in accordance with Section 56 (1) EStV.

“We would like to propose not to apply Section 56 (1) to capital gains from share trading. This will encourage foreign residents to invest in the capital market, ”added Mazumdar.

Md Sayadur Rahman, President of the Bangladesh Merchant Bankers’ Association (BMBA), called for corporate income tax to be reduced to 20% for listed companies.

Currently, corporate income tax is between 25 and 40%, depending on the type of company.

Rahman called for corporate tax rates for commercial banks to be cut by 12.5 percentage points to 25%.

He also proposed reducing VAT for listed companies by 10%.

The DSE and the BMBA also proposed to allow undisclosed funds on the capital market until the next financial year, which are taxed at 5%.

They said the deadline for putting undisclosed money in the capital market against payment of 10 percent tax would expire on June 30th.

This special tax treatment can be extended until June 30, 2022, it said, calling on the government to lower the rate to 5%.

Sharif Anwar Hossain, president of the DSE Brokers Association (DBA), said the capital market will be strengthened next year when the black money whitening program becomes available in FY 2021-22.

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