The Dhaka Stock Exchange (DSE) has made 11-points budget proposals including the corporate tax rate cut for the listed companies in the upcoming budget for the fiscal year (FY) 2020-2021.
The country's prime bourse sent their budget proposals, made for the FY 2020-2021, to the Finance Minister AHM Mustafa Kamal on Tuesday.
"We request to include the tax incentive proposals for DSE, TREC-holders, general investors and listed companies in the upcoming national budget 2020-21 to ensure sustainability, viability, credibility and liquidity of the capital market," said the DSE proposal.
At present globally stock markets are also in a bear grip on concerns over the COVID-19 pandemic and our capital market has been in bearish trend since 2018, it said.
The prime bourse proposed to reduce tax rate of publicly traded company to 20 per cent from the existing 25 per cent, other than banks, insurance and financial institutions.
"The publicly traded bank, insurance and financial institutions (except merchant bank) to 32.5 per cent from the existing 37.5 per cent", said the DSE proposal.
The DSE also proposed to increase dividend income exemption limit to Tk 200,000 from the existing Tk 50,000 with a view to spur market condition.
"Considering the present market scenario, small investors should be allowed for tax exemption up to Tk 200,000 on dividend income as it will help them to invest in capital market which will ultimately enhance the capital market growth and development," the DSE proposal said.
'If the limit increased, small investors will be benefited as they have suffered a lot due to market turmoil in recent years,' it said.
The prime bourse also urged to increase 10 per cent tax waiver period of a newly listed company to three years from the existing one year and allow 10 per cent income tax waiver for newly listed (company) bonds for a period of three years.
The DSE also proposed inclusion of Covid-19 charities as tax allowable expenses.
The lockdown impact on our economy and market has brought new challenges with existing ones for the performance of DSE.
From the point of impact TREC-holders, investors, listed companies and other stakeholders will be in years behind now in their journey in spite of being paramount in respect of employment, government revenue, contribution to the GDP and other opportunity cost, said the DSE.
The DSE also proposed to reduce advance income tax (AIT) rate of members to 0.015 per cent from the existing 0.05 per cent from main board.
It also proposed for zero AIT collection from members on the transactions of newly created SME platform.
"We strongly believe that government shall consider and waive the tax from transaction of securities listed under SME platform of the Exchanges to facilitate the sustainable development of SMEs".
The prime bourse also urged for tax exemption of stock exchanges for a period of 10 years (FY2014-15 to FY2024-25).
The DSE also sought clarification on applicability of zero tax collection from member of stock exchanges for transactions of government Treasury bill and other bonds in light with the amendment in the Finance Act 2013 in order to ensure sustainable development of bond market in line with the direction of the government.
The DSE also urged to offer special tax treatment (5%) in respect of investment in listed securities subject to retention of investment for a period of two years.
In its proposal, the DSE also urged the government to allow payment of interest or profit of listed bonds without deducting tax at source similar to government treasury bond.
The DSE also proposed to reduce standard VAT rate to 9.0 per cent from the existing 15 per cent.
The prime bourse also urged to changes in the exemption scope of stamp duty (1.5 per cent) to dematerialized securities instead of listed securities.
