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The Financial Express

IRD cuts stamp duty on bond deed registration

FE Report | Published: January 30, 2020 10:38:15 | Updated: February 01, 2020 10:56:10


- Picture used for illustrative purpose - Picture used for illustrative purpose

The Internal Resources Division (IRD) has slashed stamp duty on registration of trust agreements on issuance of all types of bonds, debenture and investment Sukuk (Islamic bond).

The investment tools, however, will have to be approved by the Bangladesh Securities and Exchange Commission (BSEC).

The stamp duty has been sharply reduced to 0.1 per cent from 2.0 per cent in a bid to make the country's bond market vibrant.

However, the amount of stamp duty on the total value of a deed will not exceed Tk 1.0 million.

The stamp administration wing of the IRD issued a Statutory Regulatory Order (SRO), dated January 27, 2019, in this connection.

It was a long-cherished demand of the BSEC to revive the country's bond and capital market.

Talking to the FE, BSEC chairman Dr M Khairul Hossain said investors found the bond market less attractive due to the higher tax.

Hailing the SRO, he said the capital market would benefit from the positive move.

He expressed his hope that the investment in the bond market would be boosted, reducing pressure on the banking sector.

It would also help develop the bond market as an alternative source of long-term financing, he said.

He, however, said the taxes should not be applicable to dematerialised bonds.

Earlier in June 2019 a government committee on long-term financing and capital market development, also proposed a cut in the stamp duty on bonds.

It also said the high rate of stamp duty and other fees, including issue manager fee, trustee fee and liability fee, increased the cost of issuance of bonds.

The committee report said an issuer has to pay Tk 40 million in stamp duty for registration of the trust deed of a bond worth Tk 2.0 billion.

The government collects the stamp duty under the Stamp Act 1899.

The committee comprising high-ups of the Ministry of Finance recommended imposition of a lump sum amount of stamp duty, as in other countries, instead of the percentage.

doulot_akter@yahoo.com

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