The securities regulator has initiated efforts to lower the capital gains tax for individual investors in a bid to stabilise and strengthen the stock market.
"We are in talks with the government and the National Board of Revenue to reduce the tax rate on capital gains," said Khondoker Rashed Maqsood, chairman of the Bangladesh Securities and Exchange Commission (BSEC), on Saturday.
"Our efforts to address this issue are ongoing, and we hope to have a positive results very soon," he said, adding that the regulator is focused on developing the capital market for the interest of individual investors.
Mr. Maqsood made the disclosure during a meeting with representatives from the Capital Market Reform Task Force, Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE), and Central Depository Bangladesh (CDBL) to discuss how to ensure long-term development of the capital market.
To make the capital market more dynamic and attract investors, the meeting addressed the need to reform existing tax policies and rationalise tax rates for the greater interest of the capital market and the investors.
To this end, The BSEC is working to attract high-quality companies by widening the tax gap between listed and non-listed firms.
The BSEC chief said that they would focus on brining profitable state-owned companies and private conglomerates to the market to improve the supply of quality stocks.
"The commission has already engaged in fruitful discussions with several major local and multinational companies to encourage their listing on the market."
The BSEC chief said the commission is working to implement necessary reforms to the existing tax policy of the capital market, enhance and modernise the surveillance system, and bring those involved in irregularities to justice.
The meeting also discussed the need to reduce the settlement time for share transactions in the capital market, aiming to make the process more convenient for market stakeholders and investors.
Top brokers and merchant bankers have long been advocating for the introduction of a T+0 share trading cycle settlement to bring dynamism in trading activities, which have currently remained sluggish.
Currently, the share trading settlement period is two days (T+2), meaning that buyers must make payment and sellers must transfer ownership of stocks within two days of the execution of trade order.
"I want to improve the market by coordinating with everyone keeping the interests of investors in mind," said the BSEC chief.
Mr. Maqsood also expressed optimism that these reforms, along with supportive policies, would enable the stock market to play a more significant role in economic growth in the near future.
Instead of taking steps to help the market recover from its ongoing decline, the previous government imposed a 15 per cent capital gains tax on individual investors for the first time in FY'24, applicable when profits exceed Tk 5 million.
Last week, a DSE delegation, led by its Chairman Mominul Islam, met with NBR Chairman Md Abdur Rahman Khan at his office to submit a written proposal for the withdrawal of the capital gains tax.
Highlighting the capital market's role in the economy, the DSE pointed out that irregularities and policy inconsistencies have impeded the growth of the country's capital market.
The DSE Brokers Association of Bangladesh has also repeatedly called for a review of the capital gains tax, considering the bearish market conditions.
At yesterday's meeting, the BSEC chairman mentioned that the commission is placing special emphasis on developing the capital market's surveillance system and is currently in discussions with the World Bank (WB) to modernise it.
Recently, the securities regulator has sought assistance from the World Bank to upgrade the surveillance system to meet international standards.
"Modernising surveillance activities is essential to prevent irregularities in the capital market and hold fraudsters accountable," said Mr Maqsood.
Everyone present at the meeting expressed the opinion that the surveillance systems of the exchanges should also be developed and their surveillance activities strengthened.
They emphasised the need to strengthen the capital market's surveillance activities through a joint initiative of the BSEC, DSE, and CSE to prevent price manipulation, insider trading, and other irregularities.
The meeting also decided to form a committee comprising representatives of DSE, CSE, and CDBL, brokerage firms and Bangladesh Bank and other related institutions to ensure better coordination for the development of the capital market.
All the stakeholders at the meeting agreed to work together to elevate the country's capital market to the next level through reform and development, reads a BSEC statement.
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