The Chittagong Stock Exchange (CSE) Monday urged the government to provide tax exemption facilities for foreign investors to attract more foreign funds in Bangladesh capital market.
"The foreign investors are interested to invest in Bangladesh capital market. If they get tax exemption facilities, they will be more attracted to invest in Bangladesh capital market," said Wali-ul-Maroof Matin, Managing Director of CSE at a post-budget press briefing held at its Dhaka Office.
Mr Matin said, currently, the foreign investors have to pay 10 per cent tax on their profits. "This tax exemption might be one of the best ways to attract more foreign investors in Bangladesh stock market," he said.
Any foreigners residing in Bangladesh or abroad willing to invest in Bangladesh capital market are considered as foreign investors.
Also known as portfolio investment, foreign investments account for around 2 per cent of DSE's total market capitalisation, which is the lowest among South Asian countries.
Mr Matin also urged the government to provide a full tax exemption facility for five years, instead of the existing partial exemption at graduated rates, for sustainable growth and smooth operation of the bourse.
"We want full tax exemption for five years to continue the reforms under the demutualisation scheme, invest further in infrastructure development for attracting strategic investors," said Mr Mation.
Terming the budget proposals capital market-friendly, he said, the incentives proposed in the budget will help to expedite the capital market.
However, he said, capital-market friendly budget means not a risk-free market. Every stock market has a risk. So, investors should take decision based on knowledge and fundamentals of the securities.
About the market's volatility despite capital market-friendly budget, he said, it is not a real reflection of budget proposals and it may take some time to create a positive impact.
Tax free individual dividend income limit has been raised to Tk 25,000 from existing 20,000 in the proposed budget. Considering the present market scenario, Mr Matin urged the government to allow for tax exemption up to Tk 50,000 on dividend income.
He also urged to reduce tax at source on share transactions to 0.015 per cent from the existing 0.05 per cent.
Appreciating the government for proposed a set of fiscal measures, including corporate tax rate cut for listed companies by 2.5 per cent and also trim down the tax rate for other listed companies to 25 per cent.
The Dhaka Stock Exchange (DSE) on Sunday also urged the government to provide a full tax exemption facility for five years, instead of the existing partial exemption at graduated rates,
Under a graduated rate, the bourses will get full tax exemption in the first year of demutualisation, 80 per cent tax exemption in the second year, 60 per cent in the third year, 40 per cent in the fourth year, 20 per cent in the fifth year, it will have to pay full taxes then on.
Before the demutualisation, stock exchanges were non-profit cooperatives owned by the exchange members, and were not subject to corporate tax.
But with the demutualisation, a way of separating the bourse management from ownership, the bourses were converted into profit-oriented companies in November 2013, owned by shareholders.
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