Dhaka Stock Exchange (DSE) wants the government to allow declaration of undisclosed money invested in different industrial sector without imposing any penalty.
"A substantial amount of undisclosed money has already been invested in the country's industrial sector. In this case, the bourse thinks the government should give opportunity to declare those without any penalty," said the DSE in a post-budget press conference in the city on Thursday.
DSE senior vice president Saiful Islam, vice president Sharif Ataur Rahman and chief executive officer Salahuddin Ahmed Khan were present.
Instead of collecting tax in cash from these companies the government can realise tax by selling equivalent amount of shares obtained from the company in the capital market in phases or through installment.
"The government should give consideration for the betterment of capital market as well as the country's further economic development to give this opportunity for undeclared but legally earned money already invested in the industrial sector to be disclosed and it will enhance revenue earnings of the government," Saiful Islam, DSE senior vice president.
He said last year the listed companies paid Tk 45 billion to the government as tax.
The DSE also proposed to withdraw 15 per cent dividend tax at source as this tax imposed on the listed company will discourage the entrepreneurs to invest in the capital market, which will ultimately affect the development of the capital market.
The prime bourse , however, hailed of offloading the shares of a number of State-owned Enterprises (SoEs) and government shares of various private companies to increase the supply of shares in the capital market.
It also welcomed the government's steps to introduce Book Building System in the capital market to attract private companies having strong financial foundation. It also lauded the reduction of tax of listed companies to 27.5 per cent from existing 30 per cent in the proposed budget.
The DSE also demanded of the government to raise funds from the capital market through issuing government bonds instead of taking loans from internal sources to meet the budget deficit.
To make the bond market effective, it proposed to bring amendment in secondary market policy of Bangladesh Bank for raising working capital from the capital market to meet debt loan payment, it said.
Deduction of tax at source from non-resident Bangladeshis (NRBs) has been made equal to resident Bangladeshis, which is an appreciable step in the proposed budget as it removes disparity, it added.
Demanding total exemption of payment of income tax in case of individual assessees earning total dividend income up to Tk 50,000 in a financial year, it said that there should be no deduction of tax at source on dividend income of individuals up to Tk 10,000.
This will encourage a large number of small investors to invest in the capital market, the DSE said.
"Dividend income of individual assessees earning above Tk 50,000 in a financial year should be considered a separate block of income and deduction of tax at source on such dividend income at the rate of 10 per cent should be considered as final discharge of tax liability," the DSE said.
It said in Pakistan, earnings from dividends are treated as a separate block of income and is taxed at a reduced rate of 10 per cent. In India, dividend distribution tax at the rate of 10 per cent is levied on the companies declaring dividend and no tax is levied on the recipient of the dividend.
"Taxing dividend income is a sort of double taxation. In order to develop capital market, dual taxation should be avoided," the DSE said.
It said tax deducted at source on interest on treasury bonds listed in a stock exchange in Bangladesh from individuals, corporate bodies and mutual funds or trust funds should be considered as final discharge of tax liability.
"This fiscal measure will encourage members of the public to invest in treasury bonds, which will open up a new avenue of public debt financing," the DSE said.
Companies with paid up capital above Tk 100 million or total assets of above Tk 200 million should be subject to supplementary tax if these companies are not listed in a stock exchange in Bangladesh.
"This measure will encourage companies to list their securities in the bourses, as it is observed that listed companies' tax payment records are much more transparent than those of unlisted companies. This move will also increase tax revenue to the public exchequer," it added.
