Flat 20pc tax rate for listed cos suggested

The proposed budgetary measure for a reduction in corporate tax by 2.5 per cent for listed companies will do little to woo good companies because of conditions, speakers tell a post-budget discussion.
The government proposes tax cuts for listed firms on two conditions-over 10 per cent of a company's capital must be raised through IPO and all receipts be collected through banking channel.
The second condition is all expenditure and investments must not exceed Tk 1.2 million, they add.
"If the listed companies only fulfil the first condition, the tax rate will be 22.5 per cent. If they don't meet both conditions, the rate will be 25 per cent. So, it will benefit the companies little," says Suborna Barua, research fellow at Bangladesh Institute of Capital Market (BICM).
The BICM hosted the discussion at its office with executive president Prof Mahmuda Akter in the chair on Tuesday.
Demanding an unconditional tax rate of 20 per cent for listed companies, keynoter Mr Suborna, also associate professor at Dhaka University, says the tax difference between listed and non-listed business entities is 7.5 per cent.
"We think the gap should be minimum 10 per cent if we want to lure long-term investment in the share market. We hope the government will make necessary revision before it gets approved."
On other proposed changes in investment for corporates, he says tax deduction at source on interest income for companies have been increased to 20 per cent from existing 10 per cent.
On the other hand, tax on capital gain on government securities has been imposed at 15 per cent, which was tax free in the past.
Dhaka Stock Exchange chairman Md Eunusur Rahman says the government seems to give the top priority to issues like post-pandemic shocks, Russia-Ukraine war and its consequences on the global supply chain.
"I think the government gives less focus on the capital market in proposing the national budget, although the stock market reached this position riding on state policy support."
Mr Rahman says they gave a seven-point proposal for reinvigorating the share market, but only one was covered in the proposed budget.
Chittagong Stock Exchange chairman Asif Ibrahim says private-sector investment needs to be enhanced further to reach the target.
But unfortunately, the private investment-GDP ratio is still 23 per cent, although the projection of the eighth five-year plan is around 70 per cent, he cites.
"If we want to achieve the massive target, we need to improve the investment climate and introduce a tax-friendly business regime."
According to Mr Ibrahim, operating costs of brokerage houses under burses increase significantly alongside substantial cuts in brokerage service commission.
"I hope the government will consider the current advance income tax on brokerage firms in the budget within this month," he states.
Prof Dr Mohammad Helal Uddin, who teaches economics at Dhaka University, says the demand in the market has reduced significantly than that in December 2010.
"Good companies won't come in such a depressed market."
Snehasish Barua, partner, Snehasish Mahmud and Company, and Ziaur Rahman, president of Capital Market Journalists' Forum (CMJF), also spoke.

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