CSE urges tax exemption, wider tax gap to attract new listings

The Chittagong Stock Exchange (CSE) has called for a three-year tax exemption for newly listed companies and a wider tax gap between listed and non-listed companies to attract new entries and increase the supply of quality securities.

The CSE made the proposal at a post-budget press briefing held on Sunday at its conference hall in Chattogram, where CSE Chairman AKM Habibur Rahman and Managing Director Shaifur Rahman Mazumdar outlined a series of recommendations to consider in the final budget.

The CSE managing director, in a written statement, proposed widening the tax gap between listed and non-listed firms to at least 10 percentage points from the existing 5 percentage points to make listing more attractive for private firms.

The proposed budget for FY27 kept the current 5-percentage-point tax gap unchanged.

The CSE argued that a larger tax differential would make listing more attractive for private companies while improving disclosure standards and helping boost government revenue over time.

It proposed the tax exemption for newly listed companies, saying the incentive would reduce the initial cost burden of going public, encouraging unlisted firms to enter the stock market.

According to the CSE, a broader listing base would increase the supply of quality shares in the market, helping improve liquidity and reduce volatility.

The bourse also opposed the government's proposal to replace the existing 20 per cent tax on dividend income of institutional investors with their individual corporate tax rate, which is feared to impede the development of the capital market.

"We suggest withdrawing this proposal and continuing with the existing 20 per cent tax rate," said the CSE managing director.

The CSE also expressed concern over the proposed withdrawal of tax benefits on zero-coupon bonds, warning that such a move could hinder the development of the corporate bond market.

The CSE urged the government to withdraw the decision in the final budget.

It also sought a five-year tax holiday for the newly formed commodity exchange, arguing that substantial investment is required to develop a world-class, technology-driven marketplace. The exchange said it has already completed technological preparations for the launch of the country's first commodity exchange and was now awaiting final regulatory approvals.

Its chief said the proposed commodity exchange would initially operate as a derivatives platform, focusing on futures contracts rather than physical delivery.

The CSE proposed launching the platform with gold, silver and crude palm oil futures, citing their global pricing benchmarks and relevance to Bangladesh's economy.

It also highlighted plans to introduce new instruments such as REITs, ETFs, index hedging and currency hedging products, saying its trading infrastructure is already capable of supporting a diversified financial ecosystem.

The exchange, however, welcomed the various policy initiatives taken in the proposed budget to modernise, deepen and create an investment-friendly environment for the country's capital market.

It also urged continued development of the corporate bond and sukuk markets, saying these instruments are essential to reducing reliance on bank financing and supporting infrastructure growth.

The CSE hailed the proposed budgetary measures for faster settlement cycles and greater institutional participation, including pension funds, insurers and mutual funds, to strengthen market stability and long-term capital formation.

"It [CSE] will continue working with regulators and policymakers to implement the budget's reform agenda and build a more transparent, technology-driven capital market," said the CSE chief.

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