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DSE tax receipts grow 14pc in April as turnover jumps

FE REPORT | May 13, 2023 00:00:00

Tax revenue from the Dhaka bourse grew 14 per cent month on month in April, thanks to increased turnover and higher share sales by sponsor-directors of the listed companies.

The government collected tax worth Tk 200 million last month as against Tk 175 million in March 2023, according to the Dhaka Stock Exchange (DSE).

Of the total earnings, tax collections from share sales by sponsor-directors rose 17 per cent month on month to Tk 97 million.

Tax revenue earnings from market turnover (except for block trades) also increased 12 per cent to Tk 103 million during the month.

The government earned the amount by collecting taxes on TREC (trading right entitlement certificate) holders' commission and on share sales by sponsor-directors and placement holders.

The DSE, on behalf of the government, collects the tax on TREC holders' commission and on share sales at the rate of 0.05 per cent and 5 per cent respectively and deposited the amount to the government exchequer.

Some companies' sponsor-directors such as Hakkani Pulp & Paper, NCC Bank, First Security Islami Bank, Miracle Industries and Intraco Refueling Stations sold shares in April while market turnover also soared, which contributed to higher tax collection, said a DSE official.

The recent margin loan relaxation by the Bangladesh Securities and Exchange Commission (BSEC) contributed to some buying pressure on selective stocks, he said.

In April, the average daily turnover stood at Tk 5.72 billion, which is 21 per cent higher than the average daily turnover in March.

However, when it comes to the first 10 months of this fiscal year, tax revenue from the DSE dropped 33 per cent year on year to Tk 2.35 billion.

A big chunk of the investors stays off from the market for long that analysts have attributed to the floor price set by the market regulator in July 2022.

The market was sluggish during the 10 months of the current fiscal year, dragging daily average turnover down 40 per cent to Tk 6.80 billion in July-April.

Floor prices restricting big-cap stocks' movements and investors' lack of confidence played a major role behind the low turnover during the period.

The market movement was mostly on a handful of stocks as most other securities remained stuck at floor prices without potential buyers since those were deemed overvalued even at that level.

Large-cap firms, such as British American Tobacco Bangladesh, Grameenphone and United Power, which had dominated the turnover chart earlier, have remained unmoved on the bourses.

Big buyers and institutional investors were upset as they could not buy-sell shares due to the price restriction.

Meanwhile, the government earned Tk 3.60 billion, the highest in 11 years, in the previous fiscal year, driven by record turnovers in a few trading sessions.

However, the FY 2011 saw the historical highest tax revenue of Tk 4.47 billion paid by the DSE to the government exchequer when the market witnessed a wild trend before crashing.

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