The Internal Resources Division of the finance ministry has cut the stamp duty on registration of trust deed of alternative investment funds to 0.1 per cent from the previous 2 per cent to encourage alternative investment in the country.
The IRD on Sunday issued a statutory regulatory order reducing the duty.
The division also set the maximum stamp duty amount at Tk 10 lakh and the minimum duty at Tk 5,000 on the total value of deed.
The reduced rate of duty, however, will be applicable only for funds approved by the Bangladesh Securities and Exchange Commission, said the SRO signed by IRD senior secretary and National Board of Revenue chairman Abu Hena Md Rahamatul Muneem.
According to the BSEC, alternative investment fund refers to any fund established or constituted in Bangladesh in the form of a trust which is a private equity fund, a venture capital fund, an impact fund or any other type of fund as declared by the commission.
According to Investopedia, an alternative investment is a financial asset that does not fall into one of the conventional investment categories, including stocks, bonds and cash. Private equity, venture capital, hedge funds, real property, commodities and tangible assets are all examples of alternative investments. The most alternative investment assets are held by institutional investors, or accredited, high-net-worth individuals.
Earlier on November 2019, the IRD reduced the duty only for the venture capital trust.
The government is encouraging investment in alternative funds to finance technology-based start-up entrepreneurs in the country.
But fund managers were reluctant to get their funds registered with the BSEC due to the high rate of the stamp duty which raised the cost of issuance of the funds and had been demanding for a reduction in the rate of duty.
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