The government has proposed no new incentives, other than the reduction in corporate tax for the listed companies, for stock market investors in the upcoming budget.
The securities regulator and the market operators, however, hailed the reduction in corporate tax saying that this facility will boost the companies' profitability.
Corporate tax for listed and non-listed companies have been proposed to be slashed by 2.5 percentage points to 22.5 per cent and 30 per cent respectively in the proposed budget for the Fiscal Year (FY) 2021-2022.
But the tax gap would remain unchanged for listed companies and non-listed companies which analysts think would discourage non-listed firms to go public.
"The gap in corporate tax for listed and non-listed companies will reduce gradually. We are happy as the companies' profitability will increase following the proposed tax cut," said Prof. Shubli Rubayat Ul Islam, the chairman of the securities regulator.
He said all demands made for the country's capital market will not be met at a time.
"To make the bond market popular, the government has also exempted the gain tax applicable at the time of transferring property. This facility will facilitate the growth of the bond market," Mr. Islam said.
The stock market analysts, bourses and market intermediaries have long been demanding for widening the tax gap at least 10 percentage points between listed and non-listed firms to attract well-performing companies into the market.
Asked, the market operators were not able to speak on overall issues of the proposed budget regarding the capital market.
They hailed the reduction in corporate tax by 2.5 per cent for the listed companies.
"The reduction in corporate tax offered during the covid pandemic will leave a positive impact in the market," said Sharif Anwar Hossain, the president of DSE Brokers Association (DBA).
In an instant reaction, the vice president of Bangladesh Merchant Bankers Association (BMBA) Md. Moniruzzaman said the reduction in corporate tax may facilitate the companies' growth in profit.
"We hoped that the government would reduce the trading tax or beneficiary owner's account fee to give small investors some respite amid the pandemic. Investors will be benefited if the steps are taken," said a stock investor Kamal Hossain.
"From the budget we got only one thing: only proposed to cut the corporate tax rate. Other than that, there is nothing for the stock investors," he said.
However, the Finance Minister AHM Mustafa Kamal proposed measures to revitalise the capital market.
"The government is implementing various reform measures to make the capital market dynamic and vibrant. A few more initiatives will be taken soon to make the stock exchange a profitable institution and keep pace with the times," said the Finance Minister in his budget speech.
He said some of them include introduction of government treasury bonds in the capital market, introduction of various instruments of the modern capital market such as Sukuk, Derivatives, Options, introduction of OTC Bulletin Board, introduction of ETF, listing of open-end mutual funds, etc.
The proposed budget has not extended the opportunity for whitening black money with a 10 per cent flat rate of tax on various sectors including stock market. However, analysts say such a move barely yielded good returns in the past.
The tax-free threshold for dividend income for individuals remained unchanged at Tk 50,000, although the bourses and stakeholders have long been demanding to increase the threshold up to Tk 100,000.
© 2024 - All Rights with The Financial Express
