After taking their financial crunch into account, the Bangladesh Securities and Exchange Commission (BSEC) has recommended full tax exemption facility for the country's two bourses for the current fiscal year (FY).
The BSEC made such recommendation after Finance Minister AMA Muhith wanted to know its opinion as a regulator following the request of the cash-strapped Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE).
According to the existing income tax rules, the DSE and CSE are required to pay 20 per cent of its total payable income tax in the current FY. As per income tax law, the bourses fall under 35 per cent tax rate like private companies.
The income tax wing has incorporated diminishing rates of tax for the bourses starting from the current FY.
Officials said the finance minister instructed the revenue board to look into the issue whether there was any point of discussion on continuation of the tax exemption facility at the time of introduction of diminishing rates of taxes.
The bourses which enjoyed full tax waiver until 2014-15 were brought under income tax net from FY 2015-16.
Talking to the FE Sunday, SEC Chairman M Khairul Hossain said the commission has recommended tax benefit for this yaer, considering the current financial health of the two bourses.
"The bourses are yet to be profitable. They could be considered for tax exemption for this year," he said.
About BSEC's income tax, he said there is no tax on regulators of any country.
Md Abdul Mazid, Chairman of the CSE, said the issue should be considered for the sake of the capital market as it is not as profitable to find a strategic partner for it.
"The company will suffer and face difficulties to get its partners if the government imposes tax from this year," he said.
The companies should enjoy tax exemption for this year to strengthen its financial health, he added.
After demutualisation, the stock exchanges came under tax net like other private bodies, but they would pay tax on total income in phases.
The bourses would enjoy the diminishing rates for next four years instead of payment of taxes on their full income like private companies.
As per a statutory regulatory order (SRO) of the NBR which took effect from July 01 in 2014, the stock exchanges will have to pay tax on their total annual income from FY 2019-20.
The revenue board will fully tax the bourse operators in phases. They would pay 40 per cent of their total income tax in FY 2016-17 while 60 per cent in 2017-18 and 80 per cent in 2018-19.
A senior tax official said the government is unlikely to offer full tax waiver to the bourses as the diminishing rate of tax has been incorporated in income tax following a consensus between the taxmen and bourses.
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