Cellphone cos opting for direct listing to get 10pc tax rebate
Doulot Akter Mala | Tuesday, 1 July 2008
Mobile phone companies by going public through direct listing will be entitled to enjoy a 10 per cent rebate on their payable income tax, according to a provision incorporated in the national budget for the fiscal 2008-09.
To enjoy the tax benefit, the telecom companies will have to float 10 per cent of their respective shares through the bourses.
In the budget presented on June 9 by Finance and Planning Adviser Mirza Azizul Islam, it was proposed that a cell phone company would be entitled to 10 per cent income tax rebate if it sold 10 per cent of its total share through initial public offering (IPO).
The advisory council on Sunday has approved the budget proposals with some changes, including the method of share floating by cell phone companies for getting tax rebate.
Banks, insurance, financial institutions and mobile phone operators are currently paying corporate tax at a rate of 45 per cent. The rate has not been revised in the budget for the 2008-09 fiscal despite strong pleas from the market players in these sectors.
Presently, there are six mobile phone companies operating in Bangladesh -- Grameenphone, AKTEL, Banglalink, CityCell, Warid and state-run Teletalk.
Country's two leading mobile phone companies -- Grameenphone and AKTEL---are expected to float their shares on the stock exchanges within this calendar year.
These two companies are expected to bring in the largest volume of shares for which the investors are waiting for a long period. The market is now hungry for quality shares which have been in short supply for sometime, a Dhaka Stock Exchange (DSE) stockbroker said.
Salahuddin Ahmed Khan, Chief Executive Officer (CEO) of the Dhaka Stock Exchange said: "The government is encouraging the cell phone operators to float their shares by offering different options."
He said country's capital market would get a big boost if mobile phone companies are listed with the stock exchanges.
On the budgetary measure regarding cell phone companies, he said: "It has been not in conformity with the DSE proposal. The DSE wanted the floatation of cell phone company shares through initial public offerings (IPOs)." He felt that direct listing might lead to the flight of capital. In case of IPOs, it would not have happened.
To enjoy the tax benefit, the telecom companies will have to float 10 per cent of their respective shares through the bourses.
In the budget presented on June 9 by Finance and Planning Adviser Mirza Azizul Islam, it was proposed that a cell phone company would be entitled to 10 per cent income tax rebate if it sold 10 per cent of its total share through initial public offering (IPO).
The advisory council on Sunday has approved the budget proposals with some changes, including the method of share floating by cell phone companies for getting tax rebate.
Banks, insurance, financial institutions and mobile phone operators are currently paying corporate tax at a rate of 45 per cent. The rate has not been revised in the budget for the 2008-09 fiscal despite strong pleas from the market players in these sectors.
Presently, there are six mobile phone companies operating in Bangladesh -- Grameenphone, AKTEL, Banglalink, CityCell, Warid and state-run Teletalk.
Country's two leading mobile phone companies -- Grameenphone and AKTEL---are expected to float their shares on the stock exchanges within this calendar year.
These two companies are expected to bring in the largest volume of shares for which the investors are waiting for a long period. The market is now hungry for quality shares which have been in short supply for sometime, a Dhaka Stock Exchange (DSE) stockbroker said.
Salahuddin Ahmed Khan, Chief Executive Officer (CEO) of the Dhaka Stock Exchange said: "The government is encouraging the cell phone operators to float their shares by offering different options."
He said country's capital market would get a big boost if mobile phone companies are listed with the stock exchanges.
On the budgetary measure regarding cell phone companies, he said: "It has been not in conformity with the DSE proposal. The DSE wanted the floatation of cell phone company shares through initial public offerings (IPOs)." He felt that direct listing might lead to the flight of capital. In case of IPOs, it would not have happened.