PRE-BUDGET DISCUSSION

Widening of tax gap between listed, non-listed cos demanded

Staff Correspondent | Published: 22:19, Mar 04,2021

 
 

The Dhaka Stock Exchange Limited and the Bangladesh Merchant Bankers Association urged the government to widen the corporate tax gap between listed and non-listed companies.

The DSE and the BMBA also demanded extension of the special tax facility given to individuals to invest money from undisclosed sources on the capital market by one year. They also sought reduction in the tax rate for the scheme from 10 per cent to 5 per cent.

They made the appeals at a pre-budget discussion with the National Board of Revenue on Thursday.

DSE chief operation officer Shaifur Rahman Mazumdar said that the difference between the corporate tax rates applicable for listed and unlisted companies should be 15 per cent.

He suggested that the rate for listed companies, except for financial companies, should be 17.5 per cent while that for financial companies should be 32.5 per cent.

If the number of listed companies can be enhanced, total revenue collection will also increase, he said.

Mazumdar said that companies which were to be listed on the SME board of exchanges should be offered concessional or reduced tax rates at 10 per cent for a period of five years from the date of listing that would encourage more companies to be listed.

He also said that companies trading under alternative trading boards should be treated as listed companies.

He proposed that source tax on the value of transaction should be reduced to a maximum 0.015 per cent.

TREC-holder companies mainly generate revenue through commission income. If tax is charged at such high rates, it becomes difficult for the TREC companies to survive and to contribute to the capital market.

Interest earnings from any corporate bond listed on any board of the stock exchanges, disregarding issuer and investors, may be exempted from tax payment, he said.

He also sought tax exemption for the investors with  dividend incomes of up to Tk 2 lakh and proposed that source tax on dividend incomes may be considered as the final tax to avoid double taxation.

BMBA president Sayedur Rahman said that the value-added tax on listed companies should be reduced to 10 per cent.

He urged for reducing the corporate tax on merchant banks to 25 per cent from the existing 37.5 per cent rate.

The Bankers Association of Bangladesh also urged the government to reduce corporate tax saying that the current rate was higher than the neighboring countries.

At the discussion, the Bangladesh Insurance Association placed a four-point proposal to the revenue board under which it sought reduction of corporate tax to 35 per cent for non-life insurance companies and to 30 per cent for life insurance companies.

Sonar Bangla Insurance chief executive officer Abdul Khaleque Miah, as the representative of the association, urged that the provision for 5per cent advance taxation on commission earnings of insurance companies’ agents should be put on hold for the next two years.

He also demanded withdrawal of the 5-per cent tax on profits of insurance policyholders and the 15-per cent VAT on reinsurance premium.

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