The board of directors of Dhaka Stock Exchange are divided over the tax measures proposed by the government in the national budget for the listed companies.
Divided opinions were given at a post-budget press conference held by the country’s premier bourse at its office premises on Sunday.
Finance minister AHM Mustafa Kamal on June 13 placed before parliament the proposal in the budget for the next fiscal year (2019-20).
The government has proposed 15 per cent tax on retained earnings and reserve if the figures exceed 50 per cent of the paid-up capital of a listed company.
The government has also imposed tax on the value of stock dividend at the rate of 15 per cent, which will be collected from the listed companies within sixty days of such dividend declaration. DSE chairman Abul Hashem said that the tax measure related to stock dividend was an incentive for the general shareholders as it would force the companies to provide cash dividends.
Hashem couldn’t provide reporters any justification for his stance in favour of the tax measure.
He said that a number of companies were continuously providing bonus dividend that hurt the general investors and the practice should be stopped.
DSE director Rakibur Rahman agreed with Hashem saying that they were pleased with the government initiative to curb ill-practices in the capital market.
He also said, ‘We should observe the impact of the policy for next three years and assess the positive and negative aspects of it.’
On the other hand, DSE managing director KAM Majedur Rahman said, ‘We will assess reactions from the listed companies and their association to make a proposal over the tax measures.’
The DSE will send proposal over the tax measures considering the companies’ business situation, he said.
DSE director Minhaj Mannan Emon said, ‘We will discuss the tax issue with the regulators and will propose the government reconsider the tax measures.’
Seeking anonymity, another DSE director said that the tax imposition on reserve and retained earnings of the listed companies was illogical.
The policy should be changed for the interest of the market, he said.
Apart from the matter, the DSE at the press conference demanded 20 per cent gap in corporate tax between the listed companies and the non-listed companies instead of the existing 10 per cent.
It also urged exemption from source tax levied on share trading at the proposed small and medium entrepreneur market of DSE.
The bourse also sought a reduction in source tax on its TREC holders to 0.015 per cent from the existing 0.05 per cent.
The Chittagong Stock Exchange at a separate press conference on Sunday hailed the government’s initiatives to revive the capital market.
It said that the 15-per cent tax on stock dividend would encourage the listed companies to declare cash dividends.
The port city bourse, however, sought undisclosed money legalisation opportunity for the stock market.
It also requested the government to increase the tax-free dividend income limit to Tk 1 lakh.
In the proposed budget, the government has raised the limit to Tk 50,000 from Tk 25,000.
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