The Bangladesh Securities and Exchange Commission (BSEC) has sought the scope for investing undisclosed money in the capital market by paying tax at a 10-per cent flat rate.
BSEC Chairman Prof. Shibli Rubayat Ul Islam gave the proposal during a discussion with Finance Minister A H M Mustafa Kamal.
"The minister has assured us of considering the chairman's proposal," said a senior BSEC official.
In the national budget for the ongoing fiscal year (FY), 2021-22, the government did not extend the previous opportunity of whitening undisclosed money with 10 per cent flat rate of tax through various sectors including stock market.
The BSEC official said the stock market saw investments of undisclosed money before withdrawing the scope of investing such money with a flat rate of tax.
"Capital flight occurs, if there is no scope of investing undisclosed money with a plain condition. That's why, we have urged the finance minister to restore the previous provision in the upcoming national budget," said the BSEC official.
Following widespread criticism from the civil society and economists, the government shifted from the policy of whitening undisclosed money in the national budget for the FY 2021-22.
As per the existing provision, people are allowed to disclose their money subject to payment of 10 per cent penal tax in addition to normal tax rates ranging from 5.0 per cent to 25 per cent for individual taxpayers.
Before withdrawing the scope of investing undisclosed money with a flat rate of tax, Tk 4.0 billion was invested in the stock market during the FY 2020-21, according to information of the National Board of Revenue (NBR).
In the first quarter of the current fiscal year of 2021-22 an amount of Tk 0.3 million in undisclosed income was invested in the stock market.
Another BSEC official said the finance minister also gave some instructions to stabilise the country's stock market.
"The securities regulator will follow the instructions to make the capital market stable."
Meanwhile, the BSEC made another proposal for extending the tax-free limit on dividend income.
"We have already placed the proposal to the NBR," said the BSEC official.
Apart from the securities regulator, the market operators are also demanding the extension of tax-free threshold for dividend income.
For the FY 2021-22, the government has set tax-free threshold for dividend income for individuals at Tk 50,000.
The BSEC official noted that the securities regulator also sought tax exemption for coupon bearing bond, like the facility available for zero coupon bond.
A regular bond pays interest to bondholders, while a zero-coupon bond does not make such interest payments.
