The gap is currently 7.5 percent on average
The stock exchange’s stakeholders yesterday aimed for a 15 percent gap in corporate income tax between listed and unlisted companies in the upcoming state budget in order to attract healthier companies to the stock exchanges.
The gap is currently 7.5 percent on average. The corporate income tax rate for listed companies is 25 percent and for unlisted companies 32.5 percent.
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.
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.
If the number of listed companies can then be increased, the government’s total revenue will also increase, Mazumdar said.
The DSE also proposed a reduced tax rate for small and medium-sized businesses of 10 percent for five years from the date of listing.
Mazumdar proposed allowing public company status to companies whose securities are listed on alternative trading boards.
The DSE also endeavored to lower the withholding tax on the value of the transaction by a maximum of 0.015 percent.
The first stock exchange also proposed increasing the tax-free dividend income limit for investors from the current Tk 50,000 to 2 lakh.
The DSE also tried to deduct taxes for foreigners.
For non-residents, a capital gains tax of 15 percent applies in accordance with Section 56 (1) EStG.
“We would like to propose not to apply Section 56 (1) to capital gains from stock trading. This will encourage foreign foreigners to invest in the capital market, ”added Mazumdar.
Md Sayadur Rahman, President of the Bangladesh Merchant Bankers’ Association, sought a corporate tax cut for listed companies to 20 percent.
Currently, corporate income tax is between 25 and 40 percent, depending on the type of business.
Rahman continued to aim to cut corporate tax rates for commercial banks by 12.5 percentage points to 25 percent.
He also proposed cutting VAT for listed companies by 10 percent.
Tamal Parvez, chairman of NRBC Bank and representative of the Bangladesh Association of Banks, called for a reduction in corporate tax for banks to allow them to spend on social development and increasing employment in the country.
The DSE and the BMBA also proposed to allow undisclosed money on the capital market until the next financial year, which is taxed at 5 percent.
Md Abdul Khaleque Miah, CEO of Sonar Bangla Insurance and representative of the Bangladesh Insurance Association, called for the 5 percent tax rule on insurance benefits from policyholders to be withdrawn and for the 15 percent sales tax and 5 percent withholding tax brokerage fee to be eliminated.
Corporate income tax should be reduced to 35 percent for non-life insurance companies and 30 percent for life insurers, he added.
“Due to macroeconomic conditions and because the government needs more revenue for development, we may not be able to consider all proposals,” said Abu Hena Md RahmatulMuneem, chairman of the NBR.
The NBR chairman asked companies for assistance in creating transparency in the collection of revenues.